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Entravision Communications Corp. – ‘10-K’ for 12/31/22

On:  Thursday, 3/16/23, at 4:06pm ET   ·   For:  12/31/22   ·   Accession #:  950170-23-8445   ·   File #:  1-15997

Previous ‘10-K’:  ‘10-K’ on 3/16/22 for 12/31/21   ·   Next:  ‘10-K/A’ on 5/1/23 for 12/31/22   ·   Latest:  ‘10-K’ on 3/14/24 for 12/31/23   ·   37 References:   By:  Entravision Communications Corp. – Latest ‘10-K’ on 3/14/24 for 12/31/23 By:  Entravision Communications Corp. – ‘S-8’ on 6/30/23 To:  Entravision Communications Corp. – ‘8-K’ on 3/3/23 for 2/28/23 To:  Entravision Communications Corp. – ‘8-K’ on 9/16/22 for 9/13/22 To:  Entravision Communications Corp. – ‘8-K’ on 6/10/22 for 6/9/22 To:  Entravision Communications Corp. – ‘8-K’ on 2/18/22 for 2/16/22 To:  Entravision Communications Corp. – ‘8-K’ on 1/7/22 for 1/4/22 To:  Entravision Communications Corp. – ‘8-K’ on 8/31/21 for 8/25/21 To:  Entravision Communications Corp. – ‘S-8’ on 8/2/21 To:  Entravision Communications Corp. – ‘8-K’ on 7/6/21 for 7/1/21 To:  Entravision Communications Corp. – ‘8-K’ on 6/9/21 for 6/4/21 To:  Entravision Communications Corp. – ‘8-K’ on 6/7/21 for 6/4/21 To:  Entravision Communications Corp. – ‘8-K’ on 6/1/21 for 5/27/21 To:  Entravision Communications Corp. – ‘10-K’ on 4/12/21 for 12/31/20 To:  Entravision Communications Corp. – ‘8-K’ on 1/26/21 for 1/25/21 To:  Entravision Communications Corp. – ‘8-K’ on 10/15/20 for 10/13/20 To:  Ulloa Walter F – ‘SC 13D’ on 5/15/20 To:  Entravision Communications Corp. – ‘8-K’ on 3/27/20 for 3/26/20 To:  Entravision Communications Corp. – ‘8-K’ on 3/13/20 for 3/10/20 To:  Entravision Communications Corp. – ‘10-Q’ on 8/8/19 for 6/30/19 To:  Entravision Communications Corp. – ‘10-K’ on 5/7/19 for 12/31/18 To:  Entravision Communications Corp. – ‘8-K’ on 12/1/17 for 11/30/17 To:  Entravision Communications Corp. – ‘8-K’ on 10/5/17 for 10/2/17 To:  Entravision Communications Corp. – ‘8-K’ on 12/30/16 for 12/26/16 To:  Entravision Communications Corp. – ‘8-K’ on 5/30/14 for 5/29/14 To:  Entravision Communications Corp. – ‘10-Q’ on 5/9/14 for 3/31/14 To:  Entravision Communications Corp. – ‘8-K’ on 1/5/12 for 12/29/11 To:  Entravision Communications Corp. – ‘8-K’ on / for 3/25/11 To:  Entravision Communications Corp. – ‘10-Q’ on 11/9/06 for 9/30/06 To:  Entravision Communications Corp. – ‘10-Q’ on 5/10/06 for 3/31/06 To:  Entravision Communications Corp. – ‘10-K’ on 3/16/06 for 12/31/05 To:  Entravision Communications Corp. – ‘10-Q’ on 11/9/05 for 9/30/05 To:  Entravision Communications Corp. – ‘10-K’ on 3/15/05 for 12/31/04 To:  Entravision Communications Corp. – ‘10-Q’ on 8/9/04 for 6/30/04 To:  Entravision Communications Corp. – ‘10-Q’ on 5/10/04 for 3/31/04 To:  Entravision Communications Corp. – ‘10-K405’ on 3/28/01 for 12/31/00 To:  Entravision Communications Corp. – ‘S-1/A’ on 6/14/00 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/16/23  Entravision Communications Corp.  10-K       12/31/22  120:27M                                    Donnelley … Solutions/FA

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                Additional Information (Detail)                                  
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                Summary of Cash and Cash Equivalents and                         
                Restricted Cash (Details)                                        
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                Reconciliation of Basic and Diluted Income (Loss)                
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                Allocation (Detail)                                              
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                Redeemable Noncontrolling Interests (Detail)                     
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                Intangible Assets Subject to Amortization Acquired               
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                Pro Forma Information (Detail)                                   
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                Changes in Noncontrolling Interests (Detail)                     
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                Major Source (Detail)                                            
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                Advertising Revenue by Sales Channel (Detail)                    
79: R61         Revenues - Summary of Disaggregation of Revenue by  HTML     46K 
                Geographical Region Based on Location of Sales                   
                Office (Detail)                                                  
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                Amount of Goodwill (Detail)                                      
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                Amortization Expense (Detail)                                    
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                (Detail)                                                         
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                Related to Lease Liabilities (Detail)                            
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                Information (Detail)                                             
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                Related-Party Balances with Univision and Other                  
                Related Parties (Detail)                                         
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                Qualifying Accounts (Detail)                                     
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM  i 10-K

ANNUAL REPORT

PURSUANT TO SECTIONS 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended i   i  i December 31,  i 2022 /  / 

OR

For the Transition Period from to

Commission File Number  i 1-15997

 i ENTRAVISION COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

are

 i 2425 Olympic Boulevard,  i Suite 6000 West

 i Santa Monica,  i California  i 90404

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: ( i 310)  i 447-3870

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐  i No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐  i No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  i Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  i Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  i ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No  i ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2022 was approximately $ i 310,382,246 (based upon the closing price for shares of the registrant’s Class A common stock as reported by The New York Stock Exchange for the last trading date prior to that date).

As of March 13, 2023, there were  i 78,356,490 shares, $0.0001 par value per share, of the registrant’s Class A common stock outstanding,  i 0 shares, $0.0001 par value per share, of the registrant’s Class B common stock outstanding and  i 9,352,729 shares, $0.0001 par value per share, of the registrant’s Class U common stock outstanding.

 i Portions of the registrant’s Proxy Statement for the 2023 Annual Meeting of Stockholders scheduled to be held on June 1, 2023 are incorporated by a reference in Part III hereof.

ENTRAVISION COMMUNICATIONS CORPORATION

FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022

TABLE OF CONTENTS

2

FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect”, “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. Some of the key factors impacting these risks and uncertainties include, but are not limited to:

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For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Risk Factors,” beginning at page 38 below.

ITEM 1. BUSINESS

The discussion of the business of Entravision Communications Corporation and its wholly-owned subsidiaries, or Entravision or the Company, is as of the date of filing this report, unless otherwise indicated.

Overview

Introduction

We are a leading global advertising solutions, media and technology company. Our operations encompass integrated, end-to-end advertising solutions across multiple media, comprised of digital, television and audio properties. For financial reporting purposes, we report in three segments based upon the type of advertising medium: digital, television and audio (formerly radio).

Our digital segment, whose operations are primarily located in Latin America, Europe, the United States, Asia and Africa, reaches a global market, with a focus on advertisers in emerging economies that wish to advertise on digital platforms owned and operated primarily by global media companies. Our television and audio operations reach and engage U.S. Hispanics in the United States.

We provide digital end-to-end advertising solutions that allow advertisers to reach online users worldwide. These solutions are comprised of four business units:
 

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Through our digital commercial partnerships business – the largest of our digital business units – we act as an intermediary between primarily global media companies and advertising customers or their ad agencies. The global media companies we represent include Meta Platforms, or Meta (formerly known as Facebook Inc.), Twitter, Inc., or Twitter, ByteDance Ltd., or ByteDance, which owns the TikTok platform, and Spotify AB, or Spotify, as well as other media companies, in 40 countries throughout the world. Our dedicated local sales teams sell advertising space on these media companies' digital platforms to our advertising customers or their ad agencies for the placement of ads directed to online users of a wide range of Internet-connected devices. We also provide some of these customers billing, technological and other support services, including strategic marketing and training, which we refer to as managed services.

Smadex is our programmatic ad purchasing platform, on which advertisers can purchase ad inventory. This practice – the purchase and sale of advertising inventory electronically – is referred to in our industry as programmatic advertising. Smadex is also a “demand-side platform”, which allows advertisers to purchase space from online marketplaces on which media companies list their advertising inventory. Most advertisements acquired through Smadex are placed on mobile devices, but they may also be placed on computers and Internet-connected televisions. We also provide managed services to some of our advertising customers in connection with their use of our Smadex platform.

We also offer a mobile growth solutions business, which provides managed services to advertisers looking to connect with consumers, primarily on mobile devices. This business allows us to manage programmatic media buys for our advertising customers or their ad agencies through multiple ad purchasing platforms in real time across multiple channels.

Our digital audio business provides digital audio advertising solutions for advertisers in the Americas. Our advertising customers and their ad agencies use these solutions to promote their brands on online audio streams, and provides them with tools to target specific users by demographic and geographic categories.

We also have a diversified media portfolio that targets Hispanic audiences. We own and/or operate 49 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. Our television operations comprise the largest affiliate group of both the top-ranked Univision television network and TelevisaUnivision’s UniMás network, with television stations in 14 of the nation’s top 50 U.S. Hispanic markets. According to TelevisaUnivision, which uses viewing data from Nielsen Holdings plc, or Nielsen, TelevisaUnivision’s primary Univision network is among the most-watched broadcast television networks among U.S. Hispanics, and delivered multiple top rated programs during the 2022 calendar year. TelevisaUnivision is a key source of programming for our television broadcasting business and we consider it to be a valuable strategic partner of ours. For a more complete discussion of our relationship with TelevisaUnivision, please see “Television – Our Relationship with TelevisaUnivision” and “Television – Television Programming” below and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview”; and for a discussion of various risks related to our relationship with TelevisaUnivision, please see “Risk Factors.”

Additionally, we own and operate one of the largest groups of primarily Spanish-language radio stations in the United States. We own and operate 45 radio stations in 14 U.S. markets. Our radio stations consist of 37 FM and 8 AM stations located in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas. We also sell advertisements and syndicate radio programming to more than 100 markets across the United States.

Historically, through our television and audio segments, we focused primarily on the U.S. Hispanic market, and our television and audio segments continue to focus on this core consumer. Additionally, with the growth of our digital segment, we now also focus on advertisers attempting to reach online users throughout the world. We have relied historically on TelevisaUnivision as one of the key strategic partners in our business and TelevisaUnivision remains our primary strategic relationship in our television segment. As our digital segment has grown, we now also rely significantly on global and other media companies as strategic partners. We expect that our digital operations will continue to grow and become an increasingly larger focus of our attention in terms of operational and growth strategies, including our acquisition strategy; commercial and strategic partnerships, meeting customer expectations; and contribution to our revenue and results of operations.

In our digital segment, we generate revenue primarily from sales of advertising that are placed by our advertising customers or their ad agencies on the digital platforms of third-party media companies for which we act as commercial partner or placed directly with online digital marketplaces through our Smadex platform. In our television segment, we generate revenue primarily from sales of national and local advertising time on television stations, retransmission consent agreements that are entered into with multichannel video programming distributors, or MVPDs, and agreements associated with our television stations’ spectrum usage rights. In our

5

audio segment, we generate revenue primarily from sales of national and local advertising time on radio stations. Advertising rates are, in large part, based on each medium’s ability to attract audiences in demographic groups targeted by advertisers.

In our digital segment, we recognize advertising revenue when display or other digital advertisements record impressions on the websites and mobile and Internet-connected television applications, or apps, of media companies on whose digital platforms the advertisements are placed or as the advertiser’s previously agreed-upon performance criteria are satisfied. In our television and audio segments, we recognize advertising revenue when commercials are broadcast. We do not obtain long-term commitments from our advertisers across any of our operations and, consequently, they may cancel, reduce or postpone orders without penalties. In our television and audio segments, we pay commissions to agencies for local and national advertising. For contracts we have entered into directly with agencies, we record net revenue from these agencies.
 

In our television segment, we refer to the revenue generated by agreements with MVPDs as retransmission consent revenue, which represents payments from MVPDs for access to our television station signals so that they may rebroadcast our signals and charge their subscribers for this programming. We recognize retransmission consent revenue earned as the television signal is delivered to an MVPD.
 

In our digital segment, net revenue generally increases in each fiscal quarter over the course of the year. Our television and audio segments experience seasonal revenue fluctuations, which are common in our industry and are due primarily to variations in advertising expenditures by both local and national advertisers. Our first fiscal quarter generally produces the lowest net revenue for the year, and our second and third fiscal quarters generally produce the highest net revenue for the year. In addition, advertising revenue is generally higher during presidential election years (2016, 2020, etc.), and, to a lesser degree, Congressional mid-term election years (2018, 2022, etc.), resulting from increased political advertising in those years compared to other years. In addition, revenue from political advertising can be affected by such factors as actual or perceived competitiveness of races in the markets we serve, which we experienced in 2022, despite its being a Congressional mid-term election, resulting in record revenue from political advertising for us. Advertising revenue in our audio segment is also generally higher during years when we broadcast the FIFA World Cup on our radio stations (2018, 2022, etc.).
 

Our licenses from the Federal Communications Commission, or FCC, grant us spectrum usage rights within each of the television markets in which we operate. These spectrum usage rights give us the authority to broadcast our stations’ over-the-air television signals to our viewers. We regard these rights as a valuable asset. We generate revenue from agreements associated with these television stations’ spectrum usage rights from a variety of sources, including but not limited to agreements with third parties to utilize spectrum for the broadcast of their multicast networks; charging fees to accommodate the operations of third parties, including moving channel positions or accepting interference with our broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. We recognize revenue generated by such agreements is recognized over the period of the agreement or when we have relinquished all or a portion of our spectrum usage rights for a station or have relinquished our rights to operate a station on the existing channel free from interference. In addition, subject to certain restrictions contained in our 2017 Credit Agreement, we will consider strategic acquisitions of television stations to further this strategy from time to time, as well as additional monetization opportunities expected to arise as the television broadcast industry implements the standards contained in ATSC 3.0.

Our net revenue for the year ended December 31, 2022 was approximately $956.2 million. Of this amount, revenue generated by our digital segment accounted for approximately 78%, revenue generated by our television segment accounted for approximately 15%, and revenue generated by our audio segment accounted for approximately 7% of total revenue. We anticipate that revenue generated by our digital segment, both in absolute dollars and as a percentage of total revenue, will continue to grow in future periods.

In our digital segment, our primary expense is cost of revenue, which consists primarily of the costs of online media acquired from the media companies for which we act as commercial partner or purchased directly from online digital marketplaces through our Smadex platform, as well as third party server costs. Our primary expenses in our television and audio segments, and a secondary expense in our digital segment, is employee compensation, including commissions paid to our sales staff and amounts paid to our national sales representative firms, as well as expenses for general and administrative functions, promotion and selling, engineering, marketing, and local programming.

Our principal executive offices are located at 2425 Olympic Boulevard, Suite 6000 West, Santa Monica, California 90404, and our telephone number is (310) 447-3870. Our corporate website is www.entravision.com.

We were organized as a Delaware limited liability company in January 1996 to combine the operations of our predecessor entities. On August 2, 2000, we completed a reorganization from a limited liability company to a Delaware corporation. On August 2, 2000, we also completed an initial public offering of our Class A common stock, which is listed on The New York Stock Exchange under the trading symbol “EVC".
 

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Business Strategy

Our digital strategy is to reach connected consumers, with a focus on those in emerging economies.

For our television and audio segments, our strategy is to reach Hispanic audiences primarily in the United States and along or near the United States/Mexico border. We own and/or operate media properties in 13 of the 20 highest-density U.S. Hispanic markets. In addition, among the top 25 U.S. Hispanic markets, we own and/or operate media properties in 8 of the 15 fastest-growing markets. We believe that targeting the U.S. Hispanic market will continue to translate into revenue growth in the future, including for the following reasons:

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We seek to increase our revenue through the following strategies for our digital segment:

Target Strategic Acquisitions and Investments. We have grown our digital segment through the acquisition of several digital advertising companies, as well as organically, over the last several years. We believe that these acquisitions, and their integration into our operations, are key to the growth of our digital segment. We intend to continue to evaluate opportunities to acquire complementary businesses that are consistent with our overall growth strategy, continuing to focus primarily on emerging economies. We believe that our knowledge of, and experience with, the global digital advertising solutions business will enable us to identify potential acquisitions of digital assets or businesses. However, we are currently subject to certain limitations on acquisitions under the terms of the 2017 Credit Agreement. Please see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” below.

Strengthen and Grow Existing and New Media Company Relationships. Over the past two years, we have built commercial partnerships with several of the world's largest media companies, and other media companies, all of which have a strong presence in emerging economies. We believe that these relationships can be enhanced by continuing to provide best-in-class local service to these media companies that wish to sell advertising space on their owned and operated digital platforms. In turn, we believe that the value-added sales services, including managed services, we provide locally, backed by a sophisticated financial and accounting operation managed from the United States, have the potential to lead to broader relationships with the global and other media companies for which we currently act as commercial partner as well as new relationships with other media companies.

Develop Best-in-Class Advertising Technology. We continue to invest in our programmatic advertising technology, primarily our Smadex programmatic ad purchasing platform. Smadex uses AI to give advertisers or their ad agencies a real-time bidding engine that allows them to manage direct purchase of advertising on digital platforms owned and operated by global and other media companies, in order to reach online users across a range of Internet-connected devices. As digital advertising continues to move more to a programmatic model, which relies heavily on technology, we intend to make appropriate investments to keep up with technological innovations and changes.

We seek to increase our revenue through the following strategies for our television and audio segments, as well as our digital segment in the United States:

Develop Unique and Compelling Content and Strong Brands While Effectively Using the Brands of Our Network Affiliates. We make investments in areas such as market research, data analysis and creative talent to license and create content for our television, audio and U.S. digital properties.

Our television operations comprise the largest affiliate group of both TelevisaUnivision's top-ranked Univision primary television network and TelevisaUnivision’s UniMás network. TelevisaUnivision reports that Univision continued its strong ratings performance as the only major broadcast network to deliver ratings and audience growth for the 2021/2022 broadcast season. UniMás is among the leading Spanish-language broadcast television networks. TelevisaUnivision makes its networks’ Spanish-language programming available to our television stations 24 hours a day, seven days a week, including a prime time schedule on its primary Univision network of substantially all first-run programming throughout the year. We believe that the breadth and diversity of TelevisaUnivision’s programming, combined with our local news and community-oriented segments, provide us with an advantage over other Spanish-language and English-language media in reaching U.S. Hispanic viewers. We design our local content in an effort to meet the needs of our communities and brand each of our stations as the best source for relevant community information that accurately reflects local interests and needs.

We format the programming of our audio networks and radio stations in an effort to capture a substantial share of the U.S. Hispanic audience in each of our audio markets. We operate each of our three audio networks – La Tricolor, La Suavecita, and Fuego – using a format designed to appeal to different listener tastes. In markets where competing stations already offer programming similar

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to our network formats, or where we otherwise identify an available niche in the marketplace, we run alternative programming that we believe appeals to local listeners.

Develop Local Content, Programming and Community Involvement. We believe that local content and service to the community in each of our markets is an important part of building our brand identity and providing meaningful local service within those markets. By combining our local news, local content and quality network programming, we believe that we have a significant competitive advantage. We also believe that our active community involvement, including station remote broadcasting appearances at customer events and concerts and tie-ins to major events, helps to build company and station awareness and identity as well as viewer and listener loyalty. We also promote civic involvement and inform our listeners and viewers of significant developments affecting their communities.

Distribute News and Other Content Across Our Television, Radio and Digital Properties. We develop our own Emmy® award-winning news, entertainment and lifestyle content. We distribute this content across our television and radio stations and their related digital properties, including four local news websites. In addition, through the Entravision Audio Network, we syndicate, distribute and sell radio programs including “Erazno y La Chokolata”, “El Show de Piolin”, “The Shoboy Show” and“El Show de Alex ‘El Genio’ Lucas” across a network of more than 300 radio stations, which includes our radio stations, as well as other radio stations that we do not own or operate, in more than 100 markets throughout the United States. We also broadcast, on an exclusive basis, and syndicate, National Football League, or NFL, games, including Sunday Night Football, Monday Night Football, and the NFL playoffs, including the Super Bowl, in Spanish, on 15 radio stations. Through our partnership with Fútbol de Primera, we also broadcast on 15 radio stations a weekly soccer show, Mexican National Soccer team matches, and, in November and December 2022, the 2022 FIFA World Cup.

Extend the Reach and Accessibility of Our Brands Through Our U.S.-Based Digital Platforms. In recent years, we have also expanded the distribution of our content through our U.S.-based digital platforms, such as the content we offer on our owned-and-operated websites and our El Boton mobile audio app. We believe that these platforms offer opportunities to further enhance the relationships we have with our audiences by allowing them to engage and share our content in new ways, while providing us with new distribution channels for one-to-one communication with them.

Continuing to Offer Advertisers an Integrated Platform of Services. We believe that our diversified media portfolio provides us with a competitive advantage in targeting the Hispanic consumer. We offer advertisers the opportunity to reach potential customers through an integrated platform of services that includes television, radio and U.S.-based digital properties. Currently, we operate some combination of television and radio in 10 markets, which we sometimes refer to as combination markets, and, where possible, we also combine our television and radio operations, which have the effect of creating certain cost savings. In all of our markets, we believe that our digital properties complement our television and/or radio operations in an effort to create value-added advertising opportunities for our advertisers.

Monetize our Spectrum Assets. In recent years, with the proliferation of mobile devices and advances in technology that have freed up spectrum capacity, the monetization of our spectrum usage rights has become a significant source of revenue. We generate revenue from agreements associated with these television stations’ spectrum usage rights from a variety of sources, including but not limited to agreements with third parties to utilize spectrum for the broadcast of their multicast networks; charging fees to accommodate the operations of third parties, including moving channel positions or accepting interference with broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. With more advances in technology, and the implementation of ATSC 3.0, we intend to continue to generate revenue from our spectrum assets.

Acquisition and Disposition Strategies

Historically, our acquisition strategy was focused on increasing our television and radio broadcasting presence in those markets in which we already competed, as well as expanding our operations into U.S. Hispanic markets where we did not own properties. We targeted fast-growing and high-density U.S. Hispanic markets. These included many markets in the southwestern United States, including Texas, California and various other markets along or near the United States/Mexico border. However, in recent years, in order to enhance our product portfolio in our digital segment, we have focused our strategy more on acquisitions of high-growth digital advertising companies in new markets for us, primarily in emerging economies, in Asia and Africa, in addition to emerging economies where we already had a presence, such as Latin America, as well as Europe.
 

We plan to continue to evaluate opportunities to make future acquisitions as opportunities present themselves, primarily internationally, and particularly digital advertising companies. Additionally, we would consider acquiring spectrum assets with high potential for future monetization, and additional media properties in markets that would enhance our overall offerings.
 

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We are subject to certain limitations on acquisitions under the terms of the 2017 Credit Agreement. We cannot at this time determine the effect that these limitations may have on our acquisition strategy or our overall business. Please see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”.

We also periodically review our portfolio of media properties and, from time to time, have divested assets where we do not see the opportunity to grow to scale or for other considerations. We are also subject to certain limitations on divestitures under the terms of the 2017 Credit Agreement. We cannot at this time determine the effect that these limitations may have on our disposition strategy or our overall business. Please see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”.
 

Digital

With a presence on five continents and personnel located in 40 countries, we provide integrated, end-to-end digital advertising solutions that allow advertisers to reach online users worldwide, through operations that are located in Latin America, Europe, the United States, Asia and Africa.

Our Solutions and Technology Platform

We have developed a suite of end-to-end digital advertising solutions, both organically and as a result of a series of acquisitions:

We provide end-to-end digital advertising solutions that allow advertisers to reach online users worldwide. These solutions are comprised of four business units:

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Our digital advertising solutions allow advertisers to design their advertising campaigns with the specific characteristics on which the advertising campaign is intended to focus, thereby reaching those online users that the advertiser identifies as high-quality and valuable. These solutions include “awareness”, by which advertisers broadly reach users of certain specific demographics for a particular advertising campaign; “acquisition”, by which advertisers directly attract new online customers in a more targeted way than awareness; and “retargeting”, by which advertisers target online users who have previously shown interest in the advertiser’s products or services but have not yet become a customer. This approach contrasts with advertising on traditional media, such as print, where an advertising campaign reaches every person accessing that medium, regardless of their individual characteristics or which characteristics are identified by the advertiser to be most valuable to it in the advertising campaign.

Digital Commercial Partnerships

Our largest digital business unit is our digital commercial partnerships business, in which we act as an intermediary between primarily global media companies and advertising customers or their ad agencies. Through local sales teams that are dedicated to these media companies, we have commercial partnerships in 30 countries worldwide. We have contractual relationships, some of which are exclusive, with these media companies, to sell their digital advertising inventory on the digital platforms that they own and operate in certain countries. We then sell this advertising inventory to our advertising customers or their ad agencies. We seek to identify and enter into commercial partnership agreements with media companies that own and operate platforms featuring premium digital content and having global audience reach, growth, composition and accessibility, across a wide range of Internet-connected devices, to achieve the objectives of our advertising customers or their ad agencies.

Typically, when we have a contractual relationship with a media company to act as its commercial partner, in the course of purchasing digital advertising a prospective advertiser would reach our dedicated local sales teams to purchase advertising inventory on the digital platform owned and operated by that media company. The services we offer can be either self-service, which means the customer drives the ad purchasing function using our dedicated sales team to process the purchase, or managed, which means our sales team provides greater input in the design and implantation of an advertising campaign, for a more customized experience for the advertiser.

Managed services include a range of related, additional business services, including:

In Latin America, where we have the largest footprint of our digital commercial partnerships business, we are Meta's only authorized commercial partner, representing it in 11 countries. We also serve as Meta's only authorized commercial partner in Ghana, Iceland and Mongolia. Additionally, we serve as Spotify's exclusive commercial partner in 16 Latin American countries, as well as Thailand. For ByteDance, we serve as an exclusive commercial partner in South Africa, a non-exclusive commercial partner in six countries in Asia, and an exclusive partner in Pakistan. We also serve Twitter as an exclusive commercial partner in three countries in Southeast Asia.

Programmatic Ad Purchasing Platform

Our end-to-end digital advertising solutions include Smadex, our programmatic ad purchasing platform, which is also known in our industry as a "demand-side” platform. This kind of platform enables our advertising customers or their ad agencies to purchase advertising electronically and manage data-driven advertising campaigns via global online marketplaces where media companies aggregate their advertising inventory. This practice – the purchase and sale of advertising inventory electronically – is referred to in our industry as programmatic advertising. Programmatic advertising, in addition to being automated, is intended to enable more precise audience targeting of online users in advertising campaigns because of the aggregation, analysis and use of data about the online users who are the targets of the advertising campaigns. Most advertisements acquired through the Smadex platform are placed on mobile devices, but may also be placed on computers and Internet-connected televisions. The services we offer can be either self-service or managed services.

Smadex is headquartered in Barcelona, Spain and provides advertising solutions to customers in more than 120 countries. Our Smadex platform utilizes proprietary technology on a cloud-based infrastructure, connecting our advertising customers or their ad agencies and digital platforms owned and operated by media companies, primarily in the mobile space. The Smadex platform delivers more than 13 billion advertisements per month to more than 600 million unique users per month.

Smadex emphasizes transparency in the delivery of advertising, offering our advertising customers granular data on their purchased advertising via real-time reports accessed from the Smadex platform. For example, for every advertisement shown, Smadex

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reports detailed information to the advertiser confirming the execution of the advertising campaign. We believe that this level of transparency assists our customers in their advertising decision-making, as well as their confidence that the advertising campaign is being executed to their requirements. In turn, we believe that this level of transparency, by providing verifiable data to our customers, makes it less likely that fraud is taking place in the execution of an advertising campaign.

While the digital advertising business is rapidly changing and subject to a number of factors, including several that are beyond our control, we believe that our programmatic digital ad purchasing business has the potential for future growth.

Mobile Growth Solutions

Our mobile growth solutions business provides our advertising customers or their ad agencies with opportunities to reach users of mobile devices through managed services in 40 countries. Our sales teams have in-depth knowledge of the complex mobile app marketing ecosystem, and work with our customers to design and execute mobile advertising marketing plans. These marketing plans are tailored to our customers' needs, and enable our customers to reach their target audiences.

We manage programmatic media buys through multiple ad purchasing platforms in real time across multiple channels. Customers choose to reach audiences primarily through two kinds of advertising: brand advertising and performance-based advertising. Brand advertising is generally intended to establish a long-term, positive consumer attitude toward an advertiser or its products or services, and such advertisers typically measure campaign effectiveness using metrics such as reach (how many consumers within the advertiser’s target audience were exposed to the advertisement) and frequency (how many times the consumer within the target audience was exposed to the advertisement). Performance-based advertising is generally intended to induce a specific action, such as clicking on an advertisement, and direct response advertisers typically measure campaign effectiveness using metrics related to consumer response to a particular advertisement. Our advertising customers can choose to pay media companies for advertisements based on different payment models including CPM, which is cost per thousand impressions; CPC, which is cost per each user click on an advertisement; or CPA, which is cost per acquisition, or each time someone acquires a product or service through engagement with an advertisement. Our sales teams are also able to provide our customers with regular reporting and the ability to further control their campaigns based on need.

Digital Audio

Our digital audio business provides our advertising customers or their ad agencies with opportunities to promote their brands on audio streams in North America and South America. This business has two components: AudioEngage and Audio.Ad. AudioEngage targets users in North America and South America, and aggregates advertising space on online streams of radio, music and audio shows in English, Spanish and Portuguese. Audio.Ad, which we acquired as part of our acquisition of Cisneros Interactive, provides digital audio advertising solutions for advertisers in Latin America, with tools allowing advertisers to target specific users by demographic and geographic categories, thereby allowing them the ability to measure, track and understand their audience's preferences.

Our Digital Customers

Our digital customers consist primarily of advertisers of all sizes or the ad agencies that represent them. For the year ended December 31, 2022, we had over 5,600 advertising customers, including top advertisers in a diverse number of industries, including healthcare, retail, e-commerce, financial technology, consumer packaged goods, gaming, delivery services, insurance, entertainment, communications, lifestyle, and travel. We do not believe that our business is substantially dependent upon any individual advertiser or industry.
 

In our digital commercial partnerships business, our customers include global and other media companies for which we act as commercial partner. These customers include Meta, Twitter, ByteDance and Spotify. The loss of one or more of the global media companies with which we have commercial partnership agreements may have an adverse impact on our digital business generally and results of operations. See Item 1A, "Risk Factors".

Digital Sales

In our digital commercial partnerships business, we maintain a local, dedicated sales team for each of the global media companies for which we act as commercial partner. For Smadex, our programmatic digital ad purchasing business, we maintain sales and marketing teams located in Europe, the United States, Asia and Latin America. We also have sales and marketing teams for our other digital business units.

Digital Advertising

We generate revenue in our digital segment by placing digital advertisements on the digital platforms of third-party media companies, whether the advertisement is purchased through us as commercial partner for media companies or purchased through our Smadex programmatic digital ad purchasing platform. Advertising customers or their ad agencies typically purchase advertising through us for campaigns that are sold and, in some instances, managed by our direct sales teams, which we refer to as managed

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campaigns. Managed campaigns provide advertisers with a higher degree of “white glove” customer service, with dedicated account teams that provide more interaction and customization in the management of advertising campaigns.

We typically contract with advertising customers or their ad agencies through insertion orders, which set forth campaign parameters such as size and duration of the campaign, type of advertising format and pricing. Our advertising customers or their ad agencies submit advertising insertion orders to us and we fulfill those orders by selling them space on the digital platforms of the media company for which we act as commercial partner, or directly through our Smadex programmatic digital ad purchasing platform.

In our digital commercial partnerships business, we are typically paid by advertisers on the basis of the number of viewer impressions shown to online users in an advertising campaign, known as a cost-per-thousand basis. In our programmatic digital ad purchasing business, we are typically paid both on a cost-per-thousand basis and a cost-per-action basis, which is measured by the number of actions, such as app installations or purchases of goods or services, taken by the online users to whom an advertisement is delivered. Typically, we collect an amount from our advertising customers or their ad agencies for the advertisement placement, retaining a pre-negotiated portion for our services and remitting the difference to the media company on whose digital platform the advertisement has been placed.

We believe that key benefits of our end-to-end digital advertising solutions include the following:

Sophisticated targeting. Our digital advertising solutions specifically identify and reach online users across a wide range of Internet-connected devices.

We believe that one of the main strengths of our digital advertising solutions, including the platforms of media companies for which we serve as commercial partner, is that these solutions can access and analyze large amounts of data in order to provide a multidimensional view of individual consumer profiles on an anonymous basis. This process, referred to as “data analytics”, helps advertisers understand the effectiveness of their advertising campaigns in reaching and engaging online users.

We believe that advertisers choose platforms because of the data analytics provided to them. In our programmatic digital ad purchasing business, we directly aggregate and leverage data from the digital platforms of media companies on which ads are placed. We have also developed a number of online user categories to which advertisers can target their advertisements. Online user categories can be based on a variety of attributes, some of which include location, demographics, affluence, intent, gender and personal interests. We identify these attributes based upon information we have gathered about users’ online activity on an anonymous basis, a process known as interest-based or online behavioral advertising. Driven by AI, we analyze these data to build sophisticated user profiles and audience groups that, in combination with our data analytics and real-time decision-making, optimization and targeting capabilities, enable us to deliver highly targeted advertising campaigns for our advertising customers or their ad agencies, as well as the data analytics to help them better understand the online users who advertisers have targeted in their advertising campaigns. As we deliver more advertisements, we are able to collect additional information about these users and the effectiveness of particular advertising campaigns, which in turn further enhances our targeting capabilities. We believe that this allows us to deliver better direct and indirect results for our advertising customers or their ad agencies, including their assessment the overall effectiveness of their advertising campaigns.

Choice of Inventory. We provide our advertising customers or their ad agencies with a wide variety of inventory where they can place their ads. Through our digital commercial partnerships business, we offer access to platforms with a global reach, such as Meta, Spotify, ByteDance and Twitter. We believe that these are premium platforms, desirable to advertisers because of their global reach, number of users and quality interactive experience. For advertising customers or their ad agencies who prefer to target users across a wide variety of media platforms of all sizes, our Smadex programmatic digital ad purchasing platform allows advertisers to access online digital marketplaces where they can place their ads in a targeted manner. Our mobile growth solutions unit also provides our advertising customers with opportunities to reach online users by placing their advertisements on a wide range of digital advertising inventory.

Brand safety. We believe that our advertising customers or their ad agencies value placing advertisements on digital platforms that are appropriate or desirable, and that their advertisements are also not being delivered with unrelated content that might be considered objectionable to the advertiser, such as content that contains distasteful or obscene language, violence, gambling, adult content or criminal activity. This is referred to in our industry as “brand safety”. In our digital commercial partnerships business, we do not attempt to define objectionable material, or interact with media companies in any manner regarding issues of perceived appropriateness, and, in fact we rely on the policies of these media companies and the technology of their digital platforms to address such issues. Nonetheless, we believe that we work with media companies that have brand safety policies and practices of their own. Moreover, our Smadex programmatic digital ad purchasing platform does have a process for promoting brand safety, having received certifications from multiple industry trade bodies, including the Interactive Advertising Bureau, and integrating third-party brand safety solutions into its technology.

Our Technology

We utilize technology in our business, primarily in connection with our Smadex programmatic digital ad purchasing platform. Smadex’s technology includes a proprietary real-time bidding system, or RTB, which is a means by which advertising is bought and sold programmatically. Successful programmatic advertising campaigns require technology that enables swift, precise and cost-efficient decision-making by applying digital algorithms to large stores of data. Smadex employs software engineers who design

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hundreds of algorithms for the Smadex RTB that rapidly process millions of data points from previous ad campaigns, together with the ad campaign details that our advertising customers or their ad agencies enter into the Smadex user interface, to programmatically acquire advertising inventory from online marketplaces where media companies list advertising inventory. The resulting analytics allow our advertising customers or their ad agencies to bid on and acquire the advertising inventory that they value the most, pay less for advertising inventory they value less and refrain from bidding on advertising inventory that does not fit their ad campaign parameters.

Additionally, Smadex’s technology processes this programmatic buying almost instantaneously. When Smadex’s RTB receives a bid request from an online advertising marketplace, it typically takes up to 100 milliseconds for the Smadex infrastructure to decide on which advertisements to bid, how much to bid for those advertisements in order to optimize cost for the advertiser, and send the advertisement for display on the online user’s device.

Smadex’s technology also provides our advertising customers or their ad agencies granular data via real-time reports accessed from the Smadex platform, allowing them to anticipate future online user behavior based on current data and identify changes and improvements in the advertiser’s digital advertising strategy. This campaign data is also fed back into the Smadex platform, and the platform’s machine-learning capabilities use this newly inputted data to further improve the efficiency and accuracy of future advertising campaigns.

Data Use

Our ability to optimize analysis of advertising campaigns and help our advertising customers or their ad agencies determine the effectiveness of those advertising campaigns depends on our ability to successfully aggregate and leverage data, including data that we collect from advertisers, platforms, technology companies and third parties, as well as data we access from our own operating history. Using cookies and non-cookie-based software, we collect information about the interactions of online users with advertisers and digital platforms owned and operated by media companies, including, for example, information about the placement of advertisements and online users’ interactions with advertisers’ own websites or advertisements.
 

Our use of data, combined with our significant audience reach, access to a large volume of digital advertising inventory and broad array of advertising formats, allows us to deliver solutions that we believe can help grow our advertising customers’ businesses. Through data analytics, we also enable advertisers to gain insights into the performance of their advertising campaigns and manage those campaigns with a view toward maximizing return on their advertising investment.
 

Key to our ability to aggregate such data is certain tracking software. Programmatic advertising companies use unique identifiers, such as Identification for Advertisers, or IDFA, on iOS devices, Google Advertising Identification (GAID), on Android devices, and cookies on web browsers, to track online user activity across the Internet and apps. It is this tracking ability that allows advertisers to both send an online user who meets the parameters of an advertising campaign targeted advertisements and determine how successful their advertising campaigns are.

This tracking ability could be restricted by a number of factors, including new developments in, or new interpretations of, laws, regulations and industry standards, consumer choice, changes in technology, including changes in web browser technology, increased visibility of consent or “do not track” software, “ad-blocking” software, and restrictions imposed by large technology companies and platform providers, web browser developers or other software developers. Certain media companies have been promoting increased user privacy as part of their product offerings and have created software that adversely impacts the availability of unique identifiers. For example, Apple previously moved to limit the ability of companies to track certain user activities via its Safari browser. In early 2021, Apple first made available App Tracking Transparency as part of its iOS 14.5, which provides online users with a pop-up window when they open an app that asks if the user wants the app to track their data. If a user chooses not to be tracked, which early evidence suggests has been the typical user response, the IDFA identifier is not available and advertisers cannot use IDFA to track users as they visit apps. This, in turn, can inhibit the ability of an advertiser to more effectively target online users for an advertising campaign and/or determine the effectiveness of that advertising campaign.
 

While Apple has introduced a replacement for the technology that companies use to measure the performance of advertising campaigns that Apple claims is more privacy friendly but still allows some advertiser tracking capability, some have said that this replacement technology is less efficient than the prior technology. This is a dynamic and rapidly evolving area
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Other mobile operating systems and browser providers have also announced, and in many cases have already introduced, product changes to limit the ability of app developers to collect and use data to target and measure advertising. In addition to Apple’s Safari, Mozilla’s Firefox and Microsoft’s Edge also block third-party cookies by default. Google has introduced new controls over third-party cookies in its Chrome web browser and has announced plans to phase out support for third-party cookies in Chrome by 2024.
 

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Some media companies, including Meta, have publicly stated that Apple’s changes have had an adverse impact on their businesses. While our digital commercial partnerships business is currently mostly concentrated in South America, where iOS only accounted for approximately 12% of the mobile operating systems used in South America as of December 2021, according to StatCounter, the impact on our digital operations of Apple’s actions and its replacement for IDFA, as well as actions that other media companies have taken and may take, is unknown at this time but has the potential to be significant. See “Risk Factors”.

The handling and protection of PII, is regulated in many jurisdictions where we operate, including but not limited to California, Virginia, Colorado, Utah, Connecticut, Brazil and the European Union, or the E.U. We believe that we comply with US state laws, Brazil’s General Data Protection Law, or LGPD, and the E.U.’s General Data Protection Regulation, or GDPR. See “Regulation of Digital Media”.

Digital Competition

We believe that the principal competitive factors in the digital advertising business include effective targeting of online users, multi-device advertising campaign delivery capability, proven and scalable technologies, online user reach, strong relationships with advertisers, brand awareness and reputation, the ability to ensure brand safety and prevent fraud, the ability to aggregate and leverage data to deliver more relevant information about advertising campaigns, use of data analytics to effectively measure performance and the ability to adapt to rapidly changing technologies that both respond to, and influence, the expectations of our customers, whether advertisers or global media companies. We believe that we compete favorably with respect to all of these factors and that we are well-positioned to be a leading provider of end-to-end digital advertising solutions for our customers.

The digital advertising business is dynamic, rapidly changing and highly competitive, influenced by frequent technological advances, trends in both the overall advertising and digital advertising markets, changing customer perceptions and expectations, and governmental or regulatory oversight and action. Our digital commercial partnerships business competes with companies such as Aleph Group, Inc., which also serves as a commercial partner to media companies worldwide, particularly in emerging economies in Central Europe, Latin America, Asia and Africa, as well as the United States. Our digital commercial partnerships business also competes with global media companies themselves, which sell advertising directly to advertisers, in addition to selling advertising through representatives such as us. Moreover, as many advertisers seek automation and enhanced targeting of increasingly fragmented audiences, they are moving a greater percentage of their advertising budgets to programmatic solutions. As a result, our digital commercial partnerships business faces more competition from a variety of companies that have allocated resources to the automated buying and selling of advertising inventory through traditional channels, like desktop computers, and new and developing channels, including mobile.
 

Smadex competes with other demand-side platforms such as The Trade Desk, Inc., Criteo Corp., Liftoff, Inc. and Moloco, Inc., which also have a global presence selling advertisements through their ad purchasing platforms. We also compete at the product and engineering level with global media companies themselves, including Meta and Google, as well as other media companies which sell digital advertising inventory directly through their own ad purchasing platforms to advertisers. Our digital operations also compete for advertising commitments with television broadcasters, cable television networks, radio broadcasters, print media and media platforms.

Many of our competitors in the digital advertising business have significantly larger financial resources and/or longer operating histories than we have in this space.

Television

Overview

We own and/or operate TelevisaUnivision-affiliated television stations in 21 markets, including 14 of the top 50 Hispanic markets in the United States. Our television operations comprise the largest affiliate group of both the top-ranked Univision primary television network and TelevisaUnivision’s UniMás network. TelevisaUnivision’s primary Univision network is available in approximately 64% of U.S. Hispanic television households. According to TelevisaUnivision, Univision continued its stellar ratings performance as the only major broadcast network to deliver ratings and audience growth for the 2021/2022 broadcast season. UniMás is among the leading Spanish-language broadcast television networks. We operate both Univision and UniMás affiliates in 17 of our 21 television markets. TelevisaUnivision’s networks make their Spanish-language programming available to our TelevisaUnivision-affiliated stations 24 hours a day, seven days a week. TelevisaUnivision’s prime time schedule on its primary Univision network consists of substantially all first-run programming throughout the year.

Our Relationship with TelevisaUnivision

Substantially all of our television stations are Univision- or UniMás-affiliated television stations. Our network affiliation agreement with TelevisaUnivision provides certain of our owned stations the exclusive right to broadcast TelevisaUnivision’s primary

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Univision network and UniMás network programming in their respective markets. Under the network affiliation agreement, we retain the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás network programming, subject to adjustment from time to time by TelevisaUnivision.

Under the network affiliation agreement, TelevisaUnivision acts as our exclusive third-party sales representative for the sale of certain national advertising on our Univision- and UniMás-affiliate television stations, and we pay certain sales representation fees to TelevisaUnivision relating to sales of all advertising for broadcast on our Univision- and UniMás-affiliate television stations. During the years ended December 31, 2022 and 2021, the amount we paid TelevisaUnivision in this capacity was $8.1 million and $8.4 million, respectively.

We also generate revenue under two marketing and sales agreements with TelevisaUnivision, which give us the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates in three markets – Albuquerque, Boston and Denver.

Under the current proxy agreement we have entered into with TelevisaUnivision, we grant TelevisaUnivision the right to negotiate the terms of retransmission consent agreements for our Univision- and UniMás-affiliated television station signals. Among other things, the proxy agreement provides terms relating to compensation to be paid to us by TelevisaUnivision with respect to retransmission consent agreements entered into with MVPDs. During the years ended December 31, 2022, 2021 and 2020, retransmission consent revenue accounted for approximately $36.0 million, $37.0 million and 36.8 million, respectively, of which $24.9 million, $25.9 million and 26.8 million, respectively, relate to the TelevisaUnivision proxy agreement. The term of the proxy agreement extends with respect to any MVPD for the length of the term of any retransmission consent agreement in effect before the expiration of the proxy agreement.

On October 2, 2017, we entered into the current network affiliation agreement with TelevisaUnivision, which superseded and replaced our prior network affiliation agreements with TelevisaUnivision. Additionally, on the same date, we entered into the current proxy agreement and current marketing and sales agreements with TelevisaUnivision, each of which superseded and replaced the prior comparable agreements with TelevisaUnivision. The term of each of these current agreements expires on December 31, 2026 for all of our Univision and UniMás network affiliate stations, except that each current agreement expired on December 31, 2021 with respect to our Univision and UniMás network affiliate stations in Orlando, Tampa and Washington, D.C.

TelevisaUnivision currently owns approximately 11% of our common stock on a fully-converted basis. Our Class U common stock, all of which is held by TelevisaUnivision, has limited voting rights and does not include the right to elect directors. Each share of Class U common stock is automatically convertible into one share of Class A common stock (subject to adjustment for stock splits, dividends or combinations) in connection with any transfer of such shares of Class U common stock to a third party that is not an affiliate of TelevisaUnivision. In addition, as the holder of all of our issued and outstanding Class U common stock, so long as TelevisaUnivision holds a certain number of shares of Class U common stock, we may not, without the consent of TelevisaUnivision, merge, consolidate or enter into a business combination, dissolve or liquidate our company or dispose of any interest in any FCC license with respect to television stations which are affiliates of TelevisaUnivision, among other things.

Television Programming

TelevisaUnivision Primary Network Programming. TelevisaUnivision has publicly stated that it directs Univision's programming primarily toward a young, family-oriented audience. It begins daily with Despierta America, a variety morning program, Sunday through Friday. In the late afternoon and early evening, Univision offers an entertainment magazine, a news magazine and national news, in addition to local news produced by our television stations. During prime time, Univision airs novelas, music specials and award shows. Prime time is followed by late news. Overnight programming consists primarily of repeats of programming aired previously on the network. Weekend daytime programming begins with children’s programming, and is generally followed by sports, reality, comedy shows and movies.

Approximately eight to ten hours of programming per weekday, including a substantial portion of weekday prime time, are currently programmed with novelas supplied primarily by TelevisaUnivision. Although novelas have been compared to daytime soap operas on the English-language television networks, the differences are significant. Novelas, originally developed as serialized books, have a beginning, middle and end, generally run five days per week and conclude three to five months after they begin. We believe that novelas also have a much broader audience appeal than soap operas, delivering audiences that contain large numbers of women, men and teenagers, unlike soap operas, whose audiences tend to be primarily women.

UniMás Network Programming. TelevisaUnivision has publicly stated that its other 24-hour general-interest Spanish-language broadcast network, UniMás, is programmed to meet the diverse preferences of the multi-faceted U.S. Hispanic community. UniMás’s

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programming includes sports (including boxing, soccer and a morning wrap-up at 6 a.m. similar to ESPN’s programming), movies (including a mix of English-language movies translated into Spanish) and novelas not run on TelevisaUnivision’s primary Univision network, as well as reruns of popular novelas broadcast on TelevisaUnivision’s primary Univision network.

Our Local Programming. We believe that our local news brands our stations in our television markets. We report our local news to relate to, and inform, our audiences. According to Nielsen, our early local news is ranked first or second among competing local newscasts regardless of language in its designated time slot in 11 of our television markets among adults 25-54 years of age, including ties, and in nine markets among adults 18-49 and adults 18-34 years of age, including ties. We have made substantial investments in people and equipment in order to provide our local communities with what we believe are quality newscasts. Our local newscasts have won numerous awards, and we strive to support the community in each of our local markets. For example, in 2022, we partnered with Children’s Miracle Network® Hospitals in a radio event to raise money for local children’s hospitals. Moreover, in several of our markets, we believe that our local news is the only significant source of Spanish-language daily news for the Hispanic community.

Network Affiliation Agreements. Substantially all of our television stations are Univision- or UniMás-affiliated television stations. Our TelevisaUnivision network affiliation agreement provides certain of our owned stations the exclusive right to broadcast TelevisaUnivision’s primary Univision network and UniMás network programming in their respective markets. The TelevisaUnivision network affiliation agreement expires in 2026, except that it expired on December 31, 2021 with respect to our Univision and UniMás network affiliate stations in Orlando, Tampa and Washington, D.C. Under the TelevisaUnivision network affiliation agreement, we retain the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás network programming, subject to adjustment from time to time by TelevisaUnivision.

Our network affiliation agreements with Fox Broadcasting Company, or Fox, give us the right to broadcast Fox network programming on KFXV-TV with simulcasts on KXFX-CD and KMBH-LD, each serving the Matamoros/Harlingen-Weslaco-Brownsville-McAllen market, and KXOF-CD, serving the Laredo market. These agreements expire on December 31, 2025.

We also have agreements with Master Distribution Service, Inc., an affiliate of Fox, which give us the right to provide ten hours per week of MyNetworkTV network programming on KXOF-CD and KPSE-LD. These agreements expire in September 2023 and may be extended for successive one-year periods by mutual consent of the parties.

Our network affiliation agreement with The CW Network, LLC, or CW, gives us the right to broadcast CW network programming through August 2026 on KCWT-CD and on the secondary program stream of KMBH-LD.

Our network affiliation agreement with NBCUniversal Media, LLC, or NBC, gives us the right to broadcast NBC network programming on KMIR-TV, serving the Palm Springs market, through December 31, 2024.

Our network affiliation agreement with Grit Media, LLC, or Grit, gives us the right to broadcast Grit network programming on WOTF-TV, serving the Orlando market, through December 31, 2024, and on the secondary program streams of KDCU-TV, serving the Wichita market, KINT-TV, serving the El Paso market, KPSE-LD, serving the Palm Springs market, KETF-CD, serving the Laredo market, and KREN-TV, serving the Reno market, through December 31, 2025.

Our network affiliation agreement with Multi Tele Ventas, S.A. de C.V., gives us the right to broadcast Milenio Televisión network programming on XDTV-TV, serving the Tijuana/San Diego market, through December 31, 2023.

Our affiliation agreement with Universal Communications Network, Inc. dba New Tang Dynasty Television gives us the right to broadcast New Tang Dynasty Television network programming on WJAL-TV, serving the Washington, D.C. market, through September 30, 2026.

Our affiliation agreement with the Church of Scientology International gives us the right to broadcast Scientology Network programming on WFTT-TV, serving the Tampa-St. Petersburg market, through December 31, 2024.

Our network affiliation agreement with Estrella Media, Inc. gives us the right to broadcast EstrellaTV network programming on

XHAS-TV, serving the Tijuana/San Diego market, through February 28, 2026.

Our network affiliation agreement with LATV Networks, LLC, or LATV, gives us the right to broadcast LATV network programming on WMDO-CD, serving the Washington, D.C. market, and on the secondary program streams of many of our television stations. Either party may terminate the affiliation with respect to a given station 30 months after the launch of such station. Under the

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LATV network affiliation agreement, there are no fees paid for the carriage of programming, and we generally retain the right to sell approximately five minutes per hour of available advertising time. Since July 2022, we own 15% of the stock of LATV. We believe that LATV is majority owned and controlled by the family of Walter F. Ulloa, our late Chief Executive Officer, who died on December 31, 2022.

We cannot guarantee that any of our current network affiliation agreements will be renewed beyond their respective expiration dates under their current terms, under terms satisfactory to us, or at all. We do not believe that the termination of any of our network affiliation agreements, other than the one with TelevisaUnivision, would have a material adverse effect on our business and results of operations.

Marketing Agreements. Our marketing and sales agreements with TelevisaUnivision give us the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates through 2026 in Albuquerque, Boston and Denver. Our marketing and sales agreements with TelevisaUnivision that gave us the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates in Orlando, Tampa and Washington, D.C. expired on December 31, 2021. We have also entered into marketing and sales agreements with other parties in two of our other markets.

Long-Term Time Brokerage Agreements. We program each of XDTV-TV, serving the Tecate/San Diego market; XHAS-TV, serving the Tijuana/San Diego market; and XHRIO-TV, serving the Matamoros/Harlingen-Weslaco-Brownsville-McAllen market, under long-term time brokerage agreements. Under those agreements, in combination with certain of our Mexican affiliates and subsidiaries, we provide the programming and related services available on these stations, but the station owners retain absolute control of the content and other broadcast issues. These long-term time brokerage agreements expire in 2038, 2040 and 2045, respectively, and each provides for automatic, perpetual 30-year renewals unless both parties consent to termination. Each of these agreements provides for substantial financial penalties should the other party attempt to terminate prior to their respective expiration dates without our consent, and they do not limit the availability of specific performance as a remedy for any such attempted early termination. As a result of changes in regulations in Mexico, we were required to prepay the license fees for our Mexico broadcast licenses for a period of 20 years. We elected not to make the required prepayment for station XHRIO-TV before the deadline to make such prepayment. As a result, we stopped broadcasting on this station in January 2022.

Our Television Station Portfolio

The following table lists information concerning each of our owned and/or operated television stations in order of market rank and its respective market:

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Source: Nielsen Media Research 2023 universe estimates.

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Digital Television Technology. As we continue to enhance digital television transmission technology for our television stations, we are operating in an environment where we can decide the resolution and number of broadcast streams we provide in our over-the-air transmissions. Depending upon how high a resolution level at which we elect to transmit our programming, we have the potential to transmit over-the-air broadcast streams containing multiple program streams using the bandwidth authorized to each digital station. The transmission of such multiple programming streams is often referred to as multicasting. We currently are multicasting network programming streams, including LATV and other network programming streams, at most of our television stations, along with our primary network program streams. We periodically evaluate these multicasting operations as well as the amount of bandwidth we must allocate to our primary program streams and may consider either expanding or limiting our multicasting operations, or keeping these multicasting operations substantially as at present, in the future.

We also continue to monitor developments in digital television technology. The ATSC sets the industry standards for the technical operation of digital broadcast television stations. ATSC 3.0 is a major revision of the ATSC standards and comprises around 20 standards covering different aspects of the system. The industry standards are designed to offer support for newer technologies that will allow enhanced video quality, datacasting capabilities, individualized advertising messages, and more robust mobile television support. Television industry observers believe that the combination of these functionalities will enable television broadcasters to engage successfully in new commercial endeavors, not previously available on broadcast television, such as targeted commercial advertising. The FCC has set regulations allowing broadcast stations to offer, on a voluntary basis, ATSC 3.0 services (which the FCC has called Next Gen TV). In doing so, full power broadcast television stations must offer ATSC 3.0 services alongside a standard ATSC 1.0 digital signal and there will not be a mandatory transition period. We are considering how we will participate in the adoption of ATSC 3.0 technology and we are monitoring how ATSC 3.0 is being adopted and accepted by viewers and advertisers.

Television Revenue

Approximately 71% of the revenue generated from our television operations in 2022 was derived from local and national advertising revenue, approximately 25% from retransmission consent revenue, and approximately 4% from spectrum usage rights.

National Advertising. National advertising revenue generally represents revenue from advertising time sold to an advertiser or its agency that is placed from outside a station’s market. We typically engage national sales representative firms to work with our station sales managers and solicit national advertising sales, and we pay certain sales representation fees to these firms relating to national advertising sales. Under our network affiliation agreement with TelevisaUnivision, TelevisaUnivision acts as our sales representative for the sale of national advertising on our Univision and UniMás affiliate television stations, and advertisers which have purchased during 2022 national advertising on these affiliate stations include Senate Majority PAC, Nissan Motor Co., Ltd., Charter Communications, Inc., Toyota Motor Corporation, Citizens for Sanity, House Majority PAC, Cox Communications, Inc., Club for Growth Action, Cano Health, Inc. and Majority Forward. Katz Communications, Inc., or Katz, acts as our national sales representative for the sale of national advertising on KMIR-TV and KPSE-LD in the Palm Springs, California market and on our stations that broadcast Fox and CW programming. In 2022, national advertising accounted for approximately 40% of our total television revenue.

Local Advertising. Local advertising revenue is generated predominantly from advertising time sold to an advertiser or its agency that is placed from within a station’s market. Local advertising sales include sales to advertisers that are local businesses or advertising agencies, and regional and national businesses or advertising agencies, which place orders from within a station’s market or directly with a station’s local sales staff. We employ our own local sales force that is responsible for soliciting local advertising sales directly from advertisers or their ad agencies. In 2022, local advertising accounted for approximately 31% of our total television revenue.

Retransmission Consent Revenue. We generate retransmission consent revenue from retransmission consent agreements that are entered into with MVPDs. This revenue represents payments from these entities for access to our television station signals so that they may rebroadcast our signals on their services and charge their subscribers for this programming. In addition, we generally pay either a per subscriber fee to or share certain of the retransmission consent revenue received from MVPDs with the network providing the programming, which is known in the television industry as reverse network compensation.

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Under our proxy agreement with TelevisaUnivision, we grant TelevisaUnivision the right to negotiate the terms of retransmission consent agreements for our Univision- and UniMás-affiliated television station signals, which covers substantially all of our retransmission consent revenue. Among other things, the proxy agreement provides terms relating to compensation to be paid to us by TelevisaUnivision with respect to retransmission consent agreements entered into with MVPDs. The term of the proxy agreement extends with respect to any MVPD for the length of the term of any retransmission consent agreement in effect before the expiration of the proxy agreement. On October 2, 2017, we entered into the current proxy agreement with TelevisaUnivision, which superseded and replaced the prior comparable agreement with TelevisaUnivision. The term of the current proxy agreement expired on December 31, 2021 for our Univision and UniMás network affiliate stations in Orlando, Tampa and Washington, D.C, and will expire on December 31, 2026 with respect to our Univision and UniMás network affiliate stations in Albuquerque, Boston and Denver. We replaced the Univision and UniMás programming in the markets where the agreement has expired.

As a result of provisions in the Communications Act of 1934, as amended, or the Communications Act, we are not able to negotiate retransmission consent agreements with other television stations located in the same television market. This provision prevents us from negotiating with TelevisaUnivision in the television markets where we and TelevisaUnivision both own television stations. We handle our negotiations directly with MVPDs in those markets where TelevisaUnivision and we are both station owners.

In 2022, retransmission consent revenue accounted for approximately 25% of our total television revenue.

Revenue from Spectrum Usage Rights. We generate revenue from agreements associated with our television stations’ spectrum usage rights from a variety of sources, including but not limited to entering into agreements with third parties to utilize spectrum for the broadcast of their multicast networks, charging fees to accommodate the operations of third parties, including moving channel positions or accepting interference from our broadcasting operations and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. Revenue from such agreements is recognized over the period of the programming agreements or when we have relinquished all or a portion of our spectrum usage rights for a station or have relinquished our rights to operate a station on the existing channel free from interference. In 2022, revenue from spectrum usage rights accounted for approximately 4% of our total television revenue.

Television Marketing/Audience Research

The relative advertising rates charged by competing stations within a market depend primarily on the following factors, among others:

Nielsen ratings provide advertisers with an industry-accepted measure of television viewing. Nielsen offers a ratings service measuring all television audience viewing. In recent years, Nielsen has modified the methodology of its ratings service in an effort to more accurately measure U.S. Hispanic viewing by using language spoken in the home as a control characteristic of its metered market sample. Nielsen has also added weighting by language as part of its local metered market methodology in many of our metered markets. Nielsen also continues to improve the methods by which it electronically measures television viewing, including using return path data, which is information acquired from MVPDs, and has expanded its Local People Meter service to several of our markets. We believe that these improvements will continue to result in more accurate ratings, allowing our advertisers to more precisely target our viewers. We have made significant investments in experienced sales managers and account executives and have provided our sales professionals with research tools to continue to attract major advertisers. There are other services that also measure television viewing and we regularly consider whether to make use of them.

Television Competition

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We face intense competition in the television broadcasting business. In each local television market, we compete for viewers and revenue with other local television stations, which are typically the local affiliates of the five principal English-language television networks, NBC, ABC, CBS, Fox and the CW Network. In certain markets, we also compete for Spanish-language viewers with the local affiliates or owned and operated stations of Telemundo, the Spanish-language television network owned by Comcast Corporation, as well as other Spanish-language networks. Telemundo is an industry leader in the production and distribution of high-quality Spanish-Language content to U.S. Hispanics and audiences around the world. Telemundo’s multiple platforms include the Telemundo Network, a Spanish-language television network featuring original productions, theatrical motion pictures, news and sporting events. Several of the companies with which we compete have significantly greater resources and longer operating histories than we do.

We also directly or indirectly compete for viewers and revenue with both English- and Spanish-language independent television stations, other video media (including streaming, mobile and on demand), suppliers of cable television network programs, direct broadcast satellite systems, newspapers, magazines, radio, apps for mobile media devices, and other forms of entertainment and advertising. In certain markets we operate radio stations that indirectly compete for local and national advertising revenue with our television stations. Additionally, advertisers allocate finite advertising budgets across different media. We believe that the advent of new technologies and services, including digital advertising on digital platforms owned and operated by media companies, may result in continued emphasis by certain advertisers on these new technologies and services as compared to legacy media, such as television and radio.

We believe that our primary competitive advantages are the quality of the programming we receive through our affiliation with TelevisaUnivision and the quality of our local news programming. According to Nielsen, TelevisaUnivision’s primary Univision network is the most-watched Spanish-language network in the United States during prime time among U.S. Hispanics. Similarly, our local news achieves strong audience ratings. Also, according to Nielsen, our early local news is ranked first or second among competing local newscasts regardless of language in its designated time slot in 11 of our television markets among adults 25-54 years of age, including ties, and in 9 markets among adults 18-49 and adults 18-34 years of age, including ties.

Audio

Overview

We own and operate 45 radio stations (37 FM and 8 AM), 40 of which are located in the top 50 Hispanic markets in the United States, and we operate the Entravision Radio Network, through which we sell advertisements and provide syndicated radio programming to more than 100 markets across the United States. According to Nielsen, our radio stations broadcast into markets with a total population of approximately 19 million U.S. Hispanics, which is approximately 31% of the Hispanic population in the United States. Our radio operations combine network and local programming with local time slots available for advertising, news, traffic, weather, promotions and community events. This strategy allows us to provide quality programming with significantly lower costs of operations than we could otherwise deliver solely with all locally produced programming.

Radio Programming

Radio Networks. Our networks allow advertisers with national product distribution to deliver a uniform advertising message to the growing Hispanic market around the country in an efficient manner.

Although our networks have a broad geographic reach, technology allows our stations to offer the necessary local feel and to be responsive to local customers and community needs. Designated time slots are used for local advertising, news, traffic, weather, promotions and community events. The audience gets the benefit of a national radio sound along with local content. We have established a new promotional unit to connect advertisers with consumers on social media platforms.

Radio Formats. Each of our three radio networks produce a music format that is simultaneously distributed via multiprotocol label switching with a high definition quality sound to our stations. Each of these formats appeals to different listener preferences:

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We broadcast, on an exclusive basis, NFL games in Spanish, including Sunday Night Football, Monday Night Football, and the NFL playoffs, including the Super Bowl, on 15 radio stations. Through our partnership with Fútbol de Primera, we also broadcast on 15 radio stations a weekly soccer show, Mexican National Soccer team matches, and, in November and December 2022, the 2022 FIFA World Cup.

Our radio networks are broadcast in 13 of the 14 radio markets that we serve. In addition, in markets where competing stations already offer programming similar to our network formats, or where we otherwise identify an available niche in the marketplace, we run alternative programming that we believe appeals to local listeners, including the following:

Additionally, in November 2020, we launched “El Botón”, a website and app that allows consumers to stream our radio shows, stations and podcasts directly on their mobile phones or other devices.

Our Radio Station Portfolio

The following table lists information concerning each of our owned and operated radio stations in order of market rank and its respective market:

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Market rank source: Nielsen Media Research 2023 universe estimates.

Radio Advertising

Substantially all the revenue generated from our radio operations is derived from local and national advertising.

Local. Local advertising revenue is generated predominantly from advertising time sold to an advertiser or its ad agency that is placed from within a station’s market. Local advertising sales include sales to advertisers that are local businesses or advertising agencies, and regional and national businesses or advertising agencies, which place orders from within a station’s market or directly with a station’s sales staff. We employ our own local sales force, in each of our markets, that is responsible for soliciting local advertising sales directly from advertisers and their agencies. In 2022, local advertising revenue accounted for approximately 56% of our total radio revenue.

National. National advertising revenue generally represents spot and network revenue from advertising time sold to an advertiser or its agency that is placed from outside a station’s market. Since January 2020, Katz has acted as our national sales representative to solicit national spot advertising sales on all of our radio stations, and we act as our own network sales representative. In 2022, national advertising revenue accounted for approximately 44% of our total radio revenue.

Radio Marketing/Audience Research

We believe that radio is an efficient means for advertisers to reach targeted demographic groups. Advertising rates charged by our radio stations are based primarily on the following factors, among others:

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Nielsen Audio provides advertisers with the industry-accepted measure of listening audience classified by demographic segment and time of day that the listeners spend on particular radio stations. Radio advertising rates generally are highest during the hours of 6:00 A.M. and 7:00 P.M. These hours are considered the peak times for radio audience listening.

Historically, advertising rates for Spanish-language radio stations have been lower than those for English-language stations with similar audience levels. We believe that, over time, possibilities exist to narrow the disparities that have historically existed between Spanish-language and English-language advertising rates as new and existing advertisers recognize the growing desirability of the U.S. Hispanic population as an advertising target. For example, U.S. Hispanics spend more on food at home than the national average. We also believe that having multiple stations in a market enables us to provide listeners with alternatives, to secure a higher overall percentage of a market’s available advertising dollars, and to obtain greater percentages of individual customers’ advertising budgets.

Each station broadcasts an optimal number of advertisements each hour, depending upon its format, in order to maximize the station’s revenue without jeopardizing its audience listenership. Our non-network stations have up to 14 minutes per hour for commercial inventory and local content. Our network stations have up to one additional minute of commercial inventory per hour. The pricing is based on a rate card and negotiations subject to the supply and demand for the inventory in each particular market and the network.

Radio Competition

We face intense competition in the radio broadcasting business. The financial success of each of our radio stations and markets depends in large part on our audience ratings, our ability to maintain and increase our market share of overall radio advertising revenue and economic conditions of the local market and the United States as a whole. In addition, our advertising revenue depends upon the desire of advertisers to reach our audience demographic. Each of our radio stations competes for audience share and advertising revenue directly with both Spanish-language and English-language radio stations in its market, and with other media, such as newspapers, broadcast, cable, satellite and streaming television, magazines, outdoor advertising, satellite-delivered radio services, apps, podcasts and other forms of digital audio delivery, and direct mail advertising. In addition, in certain markets we operate television stations that indirectly compete for local and national advertising revenue with our radio business. Our primary competitors in our markets in Spanish-language radio are TelevisaUnivision, iHeartMedia Inc. (formerly Clear Channel Communications Inc.), Audacy (formerly Entercom, Inc.) and Spanish Broadcasting System, Inc. These and many of the other companies with which we compete are companies that have significantly greater resources and longer operating histories than we do.

Factors that are material to our competitive position include management experience, a station’s audience rank in its market, signal strength and coverage, and audience demographics. If a competing station within a market converts to a format similar to that of one of our stations, or if one of our competitors upgrades its stations, we could suffer a reduction in ratings and advertising revenue in that market. The audience ratings and advertising revenue of our individual stations are subject to fluctuation and any adverse change in certain of our key radio markets could have a material adverse effect on our operations.

The radio industry is subject to competition from new media technologies that are being developed or introduced, such as:

Advertisers allocate finite advertising budgets across different media. We believe that the advent of new technologies and services may result in continued emphasis by certain advertisers on these new technologies and services as compared to legacy media, such as radio. Accordingly, while we also believe that none of these new technologies and services can completely replace local

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broadcast radio stations due to the element of localism that broadcast radio offers, the challenges we face in our radio operations from new technologies and services will continue to require attention from management. Among other things, we intend to leverage potential opportunities to adopt new technologies in our radio operations where appropriate, including digital streaming and podcasting, such as “El Botón”. We cannot guarantee that such adoption of new technologies, if any, will adequately address the challenges we face in our radio operations.

Seasonality

Our digital operations are not significantly subject to seasonality, although net revenue in our digital segment generally increases in each fiscal quarter over the course of the year. Seasonal net revenue fluctuations are common in television and radio broadcasting, and are due primarily to fluctuations in advertising expenditures by local and national advertisers. In our television and audio segments, our first fiscal quarter generally produces the lowest net revenue for the year, and our second and third fiscal quarters generally produce the highest net revenue for the year. In addition, advertising revenue across our segments is generally higher during presidential election years (2016, 2020, etc.) and, to a lesser degree, Congressional mid-term election years (2022, 2026, etc.), resulting from increased political advertising in those years compared to other years. In addition, revenue from political advertising can be affected by such factors as actual or perceived competitiveness of races in the markets we serve, which we experienced in 2022, despite its being a Congressional mid-term election, resulting in record revenue from political advertising for us. Advertising revenue in our audio segment is also generally higher during years when we broadcast the FIFA World Cup on our radio stations (2018, 2022, etc.).

Intellectual Property

We believe that our ability to protect our intellectual property is an important factor in the success and continued growth of our business. We protect our intellectual property through a combination of trade secrets law, copyrights, trademarks and contracts. We have established business procedures designed to maintain the confidentiality and security of our proprietary information, including the use of confidentiality agreements and assignment of inventions agreements with employees, independent contractors, consultants and companies with which we conduct business. While we believe that such measures are generally effective, we cannot guarantee that such measures will adequately protect our intellectual property from use, misuse or infringement by others.

In the course of our business, we use various trademarks, trade names and service marks, including our logos and FCC call letters, in our advertising and promotions, as well as proprietary technology platforms and other technology. Some of our technology relies upon third party licensed intellectual property. We do not hold or depend upon any material patent, government license, franchise or concession, except for our broadcast licenses granted by the FCC.

We are continuing to evaluate the extent to which our proprietary intellectual property used in our digital operations may be protectable beyond the measures discussed above. However, we cannot provide any assurance that any of such intellectual property is protectable beyond the measures discussed above.

Regulation of Digital Advertising

Overview. We are subject to many U.S. federal and state laws and regulations, as well as laws and regulations of other jurisdictions, applicable to businesses engaged in providing digital advertising services. The United States and certain foreign governments have enacted, considered or are currently considering legislation or regulations that relate to digital advertising activities and the use of consumer data in digital advertising, including, for example, the online collection and use of anonymous user data and unique device identifiers, such as IP address or unique mobile device identifiers, geo-location data and other privacy and data protection regulation. Some authorities have applied competition rules to regulate digital advertising practices which may result in structural changes to advertising practices. Congress in the United States and legislatures in certain other countries have implemented and are considering legislation that would structurally regulate digital advertising and the platforms that support such advertising, potentially disrupting the current markets for digital advertising services.

In general, these laws limit the use to which we can use PII gathered in the course of providing these services, impose substantial information security obligations, limit our ability to transfer data across national boundaries, provide consumers with the right to know and access data relating to them and their households and limit the retention and use of that information. These laws and regulations can affect our business to the extent that they restrict our business practices, increase our cost of compliance, impose obligations to respond to and comply with requests to limit the processing and retention of consumers’ PII, or impose a greater risk of liability for prohibited processing of PII and for data security incidents. These laws and regulations continue to evolve rapidly and may substantially impact our ability to generate revenue from digital and other advertising and marketing services, and are likely to impose additional compliance costs on our digital operations in addition to the compliance costs we currently incur.

Compliance with privacy, data protection and data security laws and regulations plays a significant role in our business. In the United States, both federal and state laws regulate activities inherent to digital advertising, including the collection, use, sharing and

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distribution of consumer data by us and by companies with which we do business in the course of providing digital advertising solutions services. We also rely on the services of third parties in gathering, using and storing consumer data, and these parties’ compliance with applicable laws affects our own compliance status.

Because we interact with consumers outside the United States and provide services to advertisers who themselves interact with those consumers, the laws of other jurisdictions may also apply to the types of services we provide and to the gathering, use, and sharing of the PII of digital media users. In addition, because we and our affiliated entities provide digital advertising solutions services to advertisers or their ad agencies, and other purchasers of advertising, in regions including Latin America, Europe, Africa and Asia, our business is subject to the laws and regulations imposed by certain countries in those regions.

Privacy and data protection regulations have gained substantial publicity and attention in light of growing consumer expectations both for enhanced services as well as privacy, especially in light of publicized data breach incidents and allegations of undisclosed and uncontested use of consumers’ PII, and increasingly are the subject of regulatory attention and enforcement as well as private litigation often taking the form of consumer class actions.

Regulation in the United States. Regulatory standards continue to evolve in ways that impose additional compliance costs and risks on businesses, like ours, that possess, process and share consumer data. For example, several states have enacted laws which affect the collection, use, retention, protection, disclosure, transfer and other processing of personal data, particularly in relation to digital advertising services. These laws include the California Privacy Rights Act, or CPRA, which expands on the California Consumer Privacy Act, or CCPA; the Colorado Privacy Act, or CPA; the Virginia Consumer Data Protection Act, or VCDPA; the Connecticut Data Privacy Act, or CDPA; and the Utah Consumer Privacy Act, or UCPA. New laws like the foregoing provide consumers with additional data privacy rights, including the right to opt out of the sharing of personal data for retargeting and certain customized advertising purposes, which can limit the data available for use in Smadex or the global media companies who are our commercial partners and to optimize our customers’ advertising impressions. New laws and regulations can further increase our current cost of compliance, limit our ability to collect and process personal data, expose us to regulatory investigations and civil actions, and cause us to change our business practices. Because these are new laws in the United States, they are also subject to interpretation and evolving regulation, it is possible that these laws and related regulations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other laws and regulations to which we are subject or our business practices. These laws and regulations may also impose obligations that are inconsistent with or interfere with our ability to comply with other legal obligations.

Of particular importance is the enactment of the CCPA, which became effective on January 1, 2020. The CCPA imposes restrictions on the use, sharing and security of PII and substantially expands the definition of covered PII to include geolocation information and device location data, among other categories of information. The CCPA also provides rights and remedies to individual consumers, including the right to object to certain marketing uses of their information and, in certain circumstances, the right to require deletion of their PII and to opt out of the sale of their PII. California voters in November 2020 approved the CPRA, which became effective on January 1, 2023 and substantially amends the CCPA and broadens the rights provided to consumers covered by the CCPA. In particular, the CPRA added a “Do Not Share My Personal Information” right that empowers consumers to require that covered businesses cease “sharing” the consumer’s PII for cross-context and cross-platform behavioral advertising. This provision may directly impact our digital advertising revenue and impose substantial additional compliance costs on us.

The CPRA also grants consumers the right to limit the use, processing and retention of certain sensitive PII. Violations of the statute may result in enforcement action by the State of California, including the imposition of substantial fines. The statute also grants a private right of action to consumers. Final regulations are pending and could add additional compliance requirements to the statutory scheme. It is likely that advertisers, advertising service providers and data providers will modify their practices in light of the CCPA and CPRA in ways that may inhibit direct-to-consumer marketing and advertising with attendant revenue impacts. In addition, because of our targeted digital advertising strategies, we will be required to implement procedures to implement and recognize these rights and restrictions, imposing both operational costs and potential loss of revenues.

The CPA and VCDPA are both effective in 2023, while the CDPA and UCPA will both become effective in January 2024. While substantially similar in scope to California’s CCPA/CPRA requirements, these other state laws provide consumers with specific rights with regard to their PII and impose additional compliance obligations on businesses covered by these laws. Final regulations are pending in these additional states and could add additional compliance requirements to these statutory schemes.

Other states are contemplating similar legislative and regulatory initiatives, some of which may impose additional or even inconsistent regulatory obligations. There are comprehensive privacy laws proposed in approximately 12 additional states. In 2023 and beyond, it is anticipated that these and possibly other states will continue to propose and adopt new data privacy laws similarly regulating the use of PII for retargeting or cross-contextual advertising. The impact of these statutes likely will extend beyond the specific markets as it may become increasingly impractical to maintain parallel compliance processes across our markets.

Additionally, state consumer protection laws and the enforcement of those laws by state attorneys general also impose substantial compliance risks on our business. By way of further example, California’s Age-Appropriate Design Code Act, or AADCA, also has been passed and will go into effect in 2024. The AADCA reaches consumers not covered by the Children's Online

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Privacy Protection Act, or COPPA. The AADCA will impose additional obligations on online platforms which may affect the advertising inventory and data available to us, impacting our business operations.

We are not presently able to determine the impact that any of these laws and regulations, within the United States or in other countries where we operate, will have on our operations and results of operations.

Because there is no United States federal privacy legislation broadly applicable across business sectors, broadcast and online advertising activities in the United States primarily have been subject to regulation and enforcement by the Federal Trade Commission, or FTC, which principally relies on its enforcement authority under Section 5 of the Federal Trade Commission Act of 1914, as amended, or the FTC Act, to investigate and respond to allegedly unfair or deceptive acts and practices. Section 5 has been the primary regulatory tool at the federal level used to respond to claims of deceptive or inadequate advertising as well as privacy policies, inadequate data security practices, and the misuse of consumer data.

The FTC’s enforcement focus has included close attention to the mobile advertising industry. For example, in December 2012, the FTC adopted amendments to rules under COPPA, which went into effect in July 2013. These amendments broaden the potential applicability of COPPA compliance obligations to our activities and those of our customers when interacting with children. In addition, the FTC’s testimonial and endorsement guidelines were updated in late 2009 and provide additional and expanded guidance for advertising practices using endorsements, testimonials, and similar content. In addition to formal rules and guidelines, the FTC’s active enforcement in the digital media industry creates evolving precedent for challenging digital advertising practices as deceptive or unfair. With the appointment of new leadership at the FTC, including a new Chair, the FTC has announced its intention to more aggressively enforce federal privacy laws, including Section 5, and has initiated proceedings designed to explore the possibility of additional administrative rulemaking that could impose additional substantive privacy compliance obligations on covered businesses. Unlike enforcement actions under Section 5, violations of such rules would result in administrative fines and other monetary liability.

The FTC has devoted particular attention to businesses within the digital media channel where the FTC has determined that potentially abusive practices have occurred or are likely to occur. The FTC focuses its enforcement resources on the accuracy of consumer disclosures, data security, data practices transparency, consumer tracking, and data aggregation. More recently, the FTC has communicated its intention to focus on the use of data to disadvantage vulnerable or minority communities, and particular attention has been paid to data brokers, processors, and aggregators of the type that may assist us in creating consumer profiles and in serving advertisements, with particular inquiry into issues of bias attendant to machine learning and algorithmically based practices. In some circumstances, the FTC has taken the position that advertisers may be liable for the acts of channel partners and has successfully brought enforcement actions against parties based on the activities of their channel partners. This creates the possibility of enforcement risk for acts other than our own.

The FTC also has employed its Section 5 authority to take action against digital advertising businesses with regard to their data security practices and policies, even apart from its traditional enforcement of privacy regulations and standards. State attorneys general also enforce consumer protection laws, some modeled after the FTC Act, in ways that affect the digital advertising industry. In addition, many states mandate specific data security measures, and all U.S. states and the District of Columbia, as well as some municipalities, enforce data breach notification laws that require notification to consumers and, in some instances, law enforcement, in the event of a covered data security incident. There are private rights of action under some of these state laws, increasing the financial risk attendant to data incidents.

Because we rely upon third parties to assist us in operating and managing digital advertising and marketing strategies, our compliance obligations (and attendant risks) include the acts and omissions of those third parties. Federal enforcement and state legislation is also increasingly applied to biometric, geolocation technologies and to sensitive PII that is used in behavioral advertising and these developments may further impair data-driven digital advertising.

Regulation in Other Countries. In other global markets we serve, the regulation of consumer practices in digital advertising is evolving. In Mexico, for example, the regulation of digital advertising largely relies on applying regulatory constraints on traditional print advertising (such as prohibitions on pornographic or politically inflammatory speech) to digital advertising. Brazil has enacted and enforces a privacy law of general application, the LGPD, substantially based on the GDPR of the E.U., that may restrict the use of consumer data in connection with targeted and behavioral advertising. Certain jurisdictions in Asia, including India, are implementing stringent consumer privacy laws similar to, but distinct from, existing international regulatory regimes like the GDPR.

The issue of privacy in the digital media industry continues to evolve. U.S. and foreign governments have enacted, have considered, or are considering, legislation or regulations that could significantly restrict industry participants’ ability to collect, retain, augment, analyze, use and share consumer data, such as by regulating the use of multi-source consumer profiling, machine learning, personalized advertising delivery and, more generally, the level of consumer notice and consent required before a company can employ “cookies” or other electronic tools to track online activities and by providing consumers with greater control over how their information is used, maintained, sold and shared. Enforcement bodies are developing rules and enforcement standards applicable to the collection, storage and use of geolocation data, biometric data, transparency of consumer data profile creation and management, and consumer access to and control over their individual online profiles and the collection of consumer data through “Internet of Things” technology. These evolving privacy and data security laws, particularly those of the United States, the E.U., Mexico and

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Brazil, present a particular compliance obligation given our operations in those jurisdictions.
 

The E.U. and its member states traditionally regulated digital advertising practices pursuant to Directive 95/46/EC (commonly known as the “Data Protection Directive”) and implementing national legislation. Effective as of May 1, 2018, the GDPR replaced the Data Protection Directive. The GDPR reaches a greater range of data processing practices that occur outside the E.U. than was the case under the Data Protection Directive, imposes substantially greater penalties for its violation, and imposes greater notice, consent and data processing obligations than did the Data Protection Directive. Current and developing E.U. law, among other things, requires advertisers to obtain specific types of explicit notice to and consent from individuals before using cookies or other technologies to track individuals and their online behavior and deliver targeted advertisements, increases monetary penalties for non-compliance, extends the extraterritorial reach of E.U. data protection laws, and grants consumers the rights in some circumstances to require that their data no longer be stored or processed. It remains a possibility that additional legislation may be passed or regulations may be enacted in the future. The GDPR increases monetary penalties for its breach that can equal 4% of an enterprise’s gross global turnover.

The United Kingdom, or the U.K., has enacted children’s privacy legislation that will impose new and complex obligations on businesses whose advertising and data collection practices reach minors under the age of 18. The law’s requirements are substantially more extensive than under the United States’ COPPA framework. In addition, the withdrawal by the U.K. from the E.U., and the current lack of a finalized permanent framework for data transfers between the E.U. and the U.K. following the withdrawal, including the absence of a means of maintaining long-term free flows of information between the E.U. and the U.K., have created new uncertainty as to the scope and content of U.K. privacy laws.
 

The regulation of cross-border data transfers is in a state of heightened uncertainty, with the E.U. judiciary having invalidated the Privacy Shield regime, which was developed by the E.U. and the United States to allow the transfer of the personal data of European nationals to the United States. While the E.U. and the United States have entered into negotiations aimed at creating a replacement for the Privacy Shield, and a replacement has been proposed pending finalization of the European Commission’s adequacy decision, and any such replacement process may also be challenged on the same grounds as was the Privacy Shield. The invalidation of a principal means for legitimizing the transfer of the PII of E.U. nationals limits the ability to coordinate cross-border digital advertising operations.

A new E.U.-U.S. Data Privacy Framework ("E.U.-U.S. DPF") has been proposed to allow cross-border data transfers, but this is pending finalization of the European Commission’s draft adequacy decision on E.U.-U.S. transfers of personal data, which may not happen until later in 2023. If and when adopted, the E.U.-U.S. DPF will require additional compliance measures, which can incur addition costs and expose us to increased regulatory scrutiny, which may increase the cost and complexity of delivering our services.
 

In addition, actions by the Belgium Data Protection Authority have questioned Europe’s Interactive Advertising Bureau, or IAB, user-facing framework (the Transparency and Control Framework, or “TCF”) that has been used to establish and manage compliance for digital advertising under the GDPR and other E.U. and U.K. privacy laws including the ePrivacy Directive. IAB Europe will implement changes to the TCF which may lead to significant changes in our business operations and will require effort to monitor the impact of proposed changes, all of which may increase operating costs, or limit our ability to operate or expand our business. Additional countries, including France and Germany, have issued additional guidance on cookie management, including disclosures and consent requirements which may require us to change our current practices and impact the volume of personal data that can be collected and used for our business purposes, including by our customers.
 

Other Regulations. We also participate in industry self-regulatory programs under which, in addition to other compliance obligations, we provide consumers with notice about our use of cookies and our collection and use of data in connection with the delivery of targeted advertising and allow them to opt out from the use of data we collect for the delivery of targeted advertising. The rules and policies of the self-regulatory programs in which we participate are updated from time to time and may impose additional costs or restrictions upon us in the future.

For example, the IAB and the IAB Tech Lab have updated their privacy protocols and have introduced a Multi-State Privacy Agreement (“MSPA”) for advertising agencies, marketers, publishers and ad-tech companies. The MSPA seeks to provide a framework and assist the digital advertising industry to comply with various, complex state privacy laws (in, for example, California, Virginia, Utah, Colorado and Connecticut). These developments can create additional costs and complexity for us in engaging with customers and digital commercial partners.
 

Additionally, in the United States and, increasingly, in other jurisdictions, consumers are provided private rights of action to file civil lawsuits, including class action lawsuits, against companies that conduct business in the digital advertising industry, including makers of devices that display digital media, providers of digital media, operating system providers, third party networks and

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providers of Internet-connected devices and related services. Plaintiffs in these lawsuits have alleged a range of violations of federal, state and common law, including computer trespass and violation of specific privacy laws. Recent appellate decisions have affirmed the standing of consumers to initiate class and mass action litigation to remedy breaches of their privacy rights and injuries resulting from data breaches. State attorneys general in most states have the authority to bring similar actions on behalf of their residents.
 

Any failure, or perceived failure, by us to comply with U.S. federal, state, or applicable international laws or regulations pertaining to privacy or data protection, or other policies, self-regulatory requirements or legal obligations could result in proceedings or actions against us by governmental entities or others, and also could result in reputational injury and/or monetary fines.

Regulation of Television and Radio Broadcasting

General. The FCC regulates television and radio broadcast stations pursuant to the Communications Act. Among other things, the FCC:

A licensee’s failure to observe the requirements of the Communications Act or FCC rules and policies may result in the imposition of various sanctions, including admonishment, fines, the grant of renewal terms of less than eight years, the grant of a license renewal with conditions or, in the case of particularly egregious violations, the denial of a license renewal application, the revocation of an FCC license or the denial of FCC consent to acquire additional broadcast properties.

Congress and the FCC have had under consideration or reconsideration, and may in the future consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation, ownership and profitability of our television and radio stations, result in the loss of audience share and advertising revenue for our television and radio broadcast stations or affect our ability to acquire additional television and radio broadcast stations or finance such acquisitions. Such matters may include:

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We cannot predict what changes, if any, might be adopted, nor can we predict what other matters might be considered in the future, nor can we judge in advance what impact, if any, the implementation of any particular proposal or change might have on our business.

FCC Licenses. Television and radio stations operate pursuant to licenses that are granted by the FCC for a term of eight years, subject to renewal upon application to the FCC. During the periods when renewal applications are pending, petitions to deny license renewal applications may be filed by interested parties, including members of the public. The FCC may hold hearings on renewal applications if it is unable to determine that renewal of a license would serve the public interest, convenience and necessity, or if a petition to deny raises a “substantial and material question of fact” as to whether the grant of the renewal applications would be inconsistent with the public interest, convenience and necessity. However, the FCC is prohibited from considering competing applications for a renewal applicant’s frequency, and is required to grant the renewal application if it finds:

If as a result of an evidentiary hearing the FCC determines that the licensee has failed to meet the requirements for renewal and that no mitigating factors justify the imposition of a lesser sanction, the FCC may deny a license renewal application. Historically, FCC licenses have generally been renewed. We have no reason to believe that our licenses will not be renewed in the ordinary course, although there can be no assurance to that effect. The non-renewal of one or more of our stations’ licenses could have a material adverse effect on our business.

Ownership Matters. The Communications Act requires prior consent of the FCC for the assignment of a broadcast license or the transfer of control of a corporation or other entity holding a license. In determining whether to approve an assignment of a television or radio broadcast license or a transfer of control of a broadcast licensee, the FCC considers a number of factors pertaining to the licensee including compliance with various rules limiting common ownership of media properties, the “character” of the licensee and those persons holding “attributable” interests therein, and the Communications Act’s limitations on foreign ownership and compliance with the FCC rules and regulations.

To obtain the FCC’s prior consent to assign or transfer a broadcast license, appropriate applications must be filed with the FCC. If the application to assign or transfer the license involves a substantial change in ownership or control of the licensee, for example, the transfer or acquisition of more than 50% of the voting equity, the application must be placed on public notice for a period of 30 days during which petitions to deny the application may be filed by interested parties, including members of the public. If an assignment application does not involve new parties, or if a transfer of control application does not involve a “substantial” change in ownership or control, it is a pro forma application, which is not subject to the public notice and 30-day petition to deny procedure. The regular and pro forma applications are nevertheless subject to informal objections that may be filed any time until the FCC acts on the application. If the FCC grants an assignment or transfer application, interested parties have 30 days from public notice of the grant to seek reconsideration of that grant. The FCC has an additional ten days to set aside such grant on its own motion. When ruling on an assignment or transfer application, the FCC is prohibited from considering whether the public interest might be served by an assignment or transfer to any party other than the assignee or transferee specified in the application.

Under the Communications Act, a broadcast license may not, absent a public interest determination by the FCC, be granted to or held by persons who are not U.S. citizens, by any corporation that has more than 20% of its capital stock owned or voted by non-U.S. citizens or entities or their representatives, by foreign governments or their representatives or by non-U.S. corporations. Furthermore, the Communications Act provides that no FCC broadcast license may be granted to or held by any corporation directly or indirectly controlled by any other corporation of which more than 25% of its capital stock is owned of record or voted by non-U.S. citizens or entities or their representatives, or foreign governments or their representatives or non-U.S. corporations. The FCC, recognizing its authority to allow foreign ownership in excess of these safe harbor levels and to allow for greater foreign investment in domestic broadcast media, has established new policies and practices allowing broadcast licensees to file petitions for declaratory ruling requesting approval (i) of up to and including 100% aggregate foreign ownership by unnamed and future foreign investors in the controlling U.S. parent of a broadcast licensee, (ii) for any named foreign investor who proposes to acquire less than 100% controlling interest to increase the interest to 100% in the future, and (iii) for any non-controlling named foreign investor to increase its interest up to 49.99% in the future. The new rules also establish that a broadcast licensee only needs to obtain specific approval for foreign investors holding more than 5% interest, and in certain circumstances more than 10% interest, in the U.S. parent of the broadcast licensee, or a controlling interest in the U.S. parent. The licenses for our stations could be revoked if our outstanding capital stock is

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issued to or for the benefit of non-U.S. citizens in excess of these limitations or in violation of the procedures adopted by the FCC. Our certificate of incorporation restricts the ownership and voting of our capital stock to enable us to comply with foreign ownership limitations.

The FCC generally applies its other broadcast ownership limits to “cognizable” interests held by an individual, corporation or other association or entity. In the case of a corporation holding broadcast licenses, the interests of officers, directors and those who, directly or indirectly, have the right to vote 5% or more of the stock of a licensee corporation are generally deemed attributable interests, as are positions as an officer or director of a corporate parent of a broadcast licensee.

Stock interests held by insurance companies, mutual funds, bank trust departments and certain other passive investors that hold stock for investment purposes only become attributable with the ownership of 20% or more of the voting stock of the corporation holding broadcast licenses.

A time brokerage agreement with another television or radio station in the same market creates an attributable interest in the brokered television or radio station as well for purposes of the FCC’s local television or radio station ownership rules, if the agreement affects more than 15% of the brokered television or radio station’s weekly broadcast hours. Likewise, a joint sales agreement (“JSA”) involving radio stations creates a similar attributable interest for the broadcast station that is undertaking the sales function. As for television stations, the FCC adopted and then eliminated the practice of attribution for television JSAs, in its quadrennial ownership proceeding. The elimination of this practice was upheld by the U.S. Supreme Court in April 2021.

Debt instruments, non-voting stock, options and warrants for voting stock that have not yet been exercised, insulated limited partnership interests where the limited partner is not “materially involved” in the media-related activities of the partnership and minority voting stock interests in corporations where there is a single holder of more than 50% of the outstanding voting stock whose vote is sufficient to affirmatively direct the affairs of the corporation generally do not subject their holders to attribution.

However, the FCC also applies a rule, known as the equity-debt-plus rule, which causes certain creditors or investors to be attributable owners of a station, regardless of whether there is a single majority stockholder or other applicable exception to the FCC’s attribution rules. Under this rule, a major programming supplier (any programming supplier that provides more than 15% of the station’s weekly programming hours) or a same-market media entity will be an attributable owner of a station if the supplier or same-market media entity holds debt or equity, or both, in the station that is greater than 33% of the value of the station’s total debt plus equity. For purposes of the equity-debt-plus rule, equity includes all stock, whether voting or nonvoting, and equity held by insulated limited partners in limited partnerships. Debt includes all liabilities, whether long-term or short-term.

Under the ownership rules currently in place, the FCC generally permits an owner to have only one television station per Designated Market Area (DMA). The FCC’s rules regarding ownership permit an owner to operate two television stations assigned to the same DMA so long as:

The FCC will consider waiving these ownership restrictions in certain cases involving failing or failed stations or stations which are not yet built.

The number of radio stations an entity or individual may own in a radio market is as follows:

Because of these multiple ownership rules, if one of our stockholders, officers or directors holds a “cognizable” interest in our company, such stockholder, officer or director may violate the FCC’s rules if such person or entity also holds or acquires an

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attributable interest in other television or radio stations in such markets, depending on their number and location. If an attributable stockholder, officer or director of our company violates any of these ownership rules, we may be unable to obtain from the FCC one or more authorizations needed to conduct our broadcast business and may be unable to obtain FCC consents for certain future acquisitions.

In recent years, the FCC has eliminated certain of its media ownership limitations, including the newspaper/broadcast cross-ownership rule, the radio-television cross-ownership rule, the so-called “eight voices” test that made it difficult to own more than one station in a smaller market, and the ownership of two of the top four television stations in a DMA. New Quadrennial Reviews were commenced in late 2018 and late 2022 and have not yet resulted in any definitive action on the FCC’s part.

The rule changes that have previously gone into effect amend the FCC’s methodology for defining a radio market for the purpose of ownership caps. The FCC replaced its signal contour method of defining local radio markets in favor of a geographic market assigned by Nielsen Audio, the private audience measurement service for radio broadcasters. For non-Nielsen Audio markets, the FCC applies a “modified contour approach”. This modified approach excludes any radio station whose transmitter site is more than 58 miles from the perimeter of the mutual overlap area.

With regard to the national television ownership limit, the FCC increased the national television ownership limit to 45% from 35%. Congress subsequently enacted legislation that reduced the nationwide cap to 39%. Accordingly, a company can now own television stations collectively reaching up to a 39% share of U.S. television households. Limits on ownership of multiple local television stations still apply, even if the 39% limit is not reached on a national level.

In establishing a national cap by statute, Congress did not make mention of the FCC’s UHF discount policy, whereby UHF stations are deemed to serve only one-half of the population in their television markets. The FCC had abolished its UHF discount policy, but grandfathered ownership interests in place at the time of the decision. However, that decision was reconsidered by the FCC and the UHF discount policy was reinstated. The FCC has an open proceeding to determine whether and how to apply the UHF discount policy as digital stations operating in the UHF mode do not face any operational problems in transmitting their signals to their broadcast markets.

The FCC has previously decided that TelevisaUnivision’s television station interests are attributable to certain of our television interests in determining the television interests we must count for local and national multiple ownership purposes. In addition, the FCC, as previously noted, has commenced a rulemaking process to consider both the nationwide cap and the UHF discount. Should the UHF discount be eliminated or the nationwide cap be interpreted to treat all stations on an equal basis, we may, in the absence of retroactive applicability, which the FCC customarily does not apply, have to divest certain stations or be limited in our ability to acquire certain additional television stations.

The Communications Act requires broadcasters to serve the “public interest.” The FCC has relaxed or eliminated many of the more formalized procedures it developed to promote the broadcast of certain types of programming responsive to the needs of a broadcast station’s community of license. Nevertheless, a broadcast licensee continues to be required to present programming in response to community problems, needs and interests and to maintain certain records demonstrating its responsiveness. The FCC considers complaints from the public about a broadcast station’s programming when it evaluates the licensee’s renewal application, but complaints also may be filed and considered at any time. Stations also must follow various FCC rules that regulate, among other things, political broadcasting, the broadcast of profane, obscene or indecent programming, sponsorship identification (including foreign government program sponsorship identification), the broadcast of contests and lotteries and technical operations.

The FCC requires that licensees must not discriminate in hiring practices. It has adopted rules that require us to adhere to certain outreach practices when hiring personnel for our stations and to keep records of our compliance with these requirements. The FCC’s Equal Employment Opportunity, or EEO, rules set forth a three-pronged recruitment and outreach program for companies with five or more full-time employees that requires the wide dissemination of information regarding full-time vacancies, notification to requesting recruitment organizations of such vacancies, and a number of non-vacancy related outreach efforts such as job fairs and internships. Stations are required to collect various information concerning vacancies, such as the number filled, recruitment sources used to fill each vacancy, and the number of persons interviewed for each vacancy. While stations are not required to routinely submit information to the FCC, stations must place an EEO report containing vacancy-related information and a description of outreach efforts in their public file annually. Stations must submit the preceding two years of their annual EEO public file report as part of their renewal applications. Stations also must place their EEO public file report on their Internet websites, if they have one. The FCC periodically audits for compliance with its EEO rules. Failure to comply with the FCC’s EEO rules could result in sanctions or the revocation of station licenses. The EEO rules do not materially affect our operations.

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“Retransmission Consent” and “Must Carry” Rules. FCC regulations implementing the Cable Television Consumer Protection and Competition Act of 1992, or the Cable Act, require each full-power television broadcaster to elect, at three-year intervals beginning October 1, 1993, to either:

Currently and for the three-year period commencing on January 1, 2024, we intend to maintain our “retransmission consent” elections with almost all of the MVPDs that carry our full-service television programming in our television markets. We have arrangements or have entered into agreements with nearly all of our MVPDs as to the terms of the carriage of our television stations and the compensation we will receive for granting such carriage rights, including through our national program supplier for Spanish-language programming, TelevisaUnivision, for our Univision- and UniMás-affiliated television stations. We also have retransmission consent arrangements for our stations that do not have Univision or UniMás affiliations. As previously discussed, television stations in the same television market, even if not commonly-controlled, are not permitted to engage in joint negotiations for retransmission consent. This rule prohibits us and TelevisaUnivision from negotiating retransmission consent jointly, or from coordinating such negotiations, in those television markets where both companies own television stations.

The FCC has rules that govern the negotiation of retransmission consent agreements based on a policy decision to have those agreements negotiated in good faith. The FCC has an open proceeding that could result in establishing new ground rules for such negotiations, including prohibiting certain negotiating practices on the part of broadcasters. In recently enacted legislation, small groups of cable systems were permitted to negotiate with large broadcast stations groups. We do not believe that this provision will have a material impact on our retransmission consent revenues. We are not certain whether or in what other form such provisions might be adopted and the impact of such changes on our negotiations and the economic results of such negotiations. Under the FCC’s rules currently in effect, cable systems are only required to carry one signal from each local broadcast television station. As an element of the retransmission consent negotiations described above, we arranged that our broadcast signal be available to our MVPD viewers, no matter whether they obtain their cable service in analog or digital modes. Cable systems have transitioned to providing substantially all their cable services in digital only and we expect that any remaining analog cable service operations will be terminated by most cable operators and in most markets in the near future.

We continue to explore and develop, subject to our legal rights to do so, and the economic opportunities available to us, the distribution of our programming in alternative modes, such as by delivery on the Internet through OTT services, by multicast delivery services, and to individuals possessing wireless mobile reception devices.

Time Brokerage, Joint Sales Agreements and Shared Services Agreements. From time to time, we have entered into time brokerage, joint sales and shared services agreements, generally in connection with pending station acquisitions, under which we are given the right to broker time on stations owned by third parties, agree that other parties may broker time on our stations, we or other parties sell broadcast time on a station, or share operating services with another broadcast station in the same market, as the case may be. By using these agreements, we can provide programming and other services to a station proposed to be acquired before we receive all applicable FCC and other governmental approvals, or receive such programming and other services where a third party is better able to undertake programming and/or sales efforts for us.

FCC rules and policies generally permit time brokerage agreements if the station licensee retains ultimate responsibility for and control of the applicable station. We cannot guarantee that we will be able to air all of our scheduled programming on a station with which we have time brokerage agreements or that we will receive the anticipated revenue from the sale of advertising for such programming.

Under a typical joint sales agreement, a station licensee obtains, for a fee, the right to sell substantially all of the commercial advertising on a separately owned and licensed station in the same market. It also involves the provision by the selling party of certain sales, accounting and services to the station whose advertising is being sold. Unlike a time brokerage agreement, the typical joint sales agreement does not involve operating the station’s program format. The FCC has eliminated rules that make television joint sales agreements attributable to the marketing station.

In a shared services agreement, one station provides services, generally of a non-programming nature, to another station in the same market. This enables the recipient of the services to save on overhead costs.

As part of its increased scrutiny of television and radio station acquisitions, the Department of Justice, or DOJ, has stated publicly that it believes that time brokerage agreements and joint sales agreements could violate the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSRA, if such agreements take effect prior to the expiration of the waiting period

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under the HSRA. Furthermore, the DOJ has noted that joint sales agreements may raise antitrust concerns under Section 1 of the Sherman Antitrust Act and has challenged them in certain locations. The DOJ also has stated publicly that it has established certain revenue and audience share concentration benchmarks with respect to television and radio station acquisitions, above which a transaction may receive additional antitrust scrutiny. See Item 1A, “Risk Factors” below.

Digital Television Services. The FCC has implemented digital television service in the United States. Implementation of digital television has improved the technical quality of television signals and provides broadcasters the flexibility to offer new services, including high-definition television and broadband data transmission.

The FCC has required full-power and Class A television stations in the United States to operate in digital television since July 13, 2023. We timely completed the digital transition of all of our full-power and Class A television stations to the digital mode and those of our low-power stations where we believed it was in our best interest to do so.

Equipment and other costs associated with the transition to digital television, including the relocation of stations from one channel to another, have imposed some near-term financial costs on our television stations providing the services, some of which costs we recouped through reimbursements from the FCC. The potential exists for new sources of revenue to be derived from use of the digital spectrum, which we continue to explore as digital station operations evolve.

Digital Radio Services. The FCC has adopted standards for authorizing and implementing terrestrial digital audio broadcasting technology, known as “In-Band On-Channel™” or HD Radio, for radio stations. Digital audio broadcasting’s advantages over traditional analog broadcasting technology include improved sound quality and the ability to offer a greater variety of auxiliary services. This technology permits FM and AM stations to transmit radio programming in both analog and digital formats, or in digital only formats, using the bandwidth that the radio station is currently licensed to use. We have elected and commenced the process of rolling out this technology on a gradual basis owing to the absence of receivers equipped to receive such signals and are considering its merits as well as its costs. It is unclear what effect such technology will have on our business or the operations of our radio stations.

Radio Frequency Radiation. The FCC has adopted rules limiting human exposure to levels of radio frequency radiation. These rules require applicants for renewal of broadcast licenses or modification of existing licenses to inform the FCC whether an applicant’s broadcast facility would expose people to excessive radio frequency radiation. We currently believe that all of our stations are in compliance with the FCC’s current rules regarding radio frequency radiation exposure.

Low-Power Radio Broadcast Service. The FCC has created a low-power FM radio service and has granted a limited number of construction permits for such stations. Pursuant to legislation adopted in 2011, this service is being expanded and the opportunities for FM translator stations reduced. The low-power FM service allows for the operation of low-power FM radio stations, with a maximum power level of 100 watts. The 100-watt stations reach an area with a radius of approximately three and one-half miles. The low-power FM stations are required to protect other existing FM stations, as currently required of full-powered FM stations.

The low-power FM service is exclusively non-commercial. To date, our stations have not suffered any technical interference from such low-power FM stations’ signals. Due to current technical restrictions and the non-commercial ownership requirement for low-power FM stations, we have not found that low-power FM service has caused any detrimental economic impact on our stations as well. Federal legislation has resulted in the increase in the availability of the low-power FM service and the FCC has recently begun granting new low-power FM authorizations.

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Other Proceedings. The Satellite Home Viewer Improvement Act of 1999, or SHVIA, allows satellite carriers to deliver broadcast programming to subscribers who are unable to obtain television network programming over the air from local television stations. Congress in 1999 enacted legislation to amend the SHVIA to facilitate the ability of satellite carriers to provide subscribers with programming from local television stations. Any satellite company that has chosen to provide local-into-local service must provide subscribers with all of the local broadcast television signals that are assigned to the market and where television licensees ask to be carried on the satellite system. We have taken advantage of this law to secure carriage of our full-power stations in those markets where the satellite operators have implemented local-into-local service. SHVIA expired in 2004 and Congress adopted the Satellite Home Viewer Extension and Reauthorization Act of 2004, or SHVERA. SHVERA extended the ability of satellite operators to implement local-into-local service. SHVERA expired in late 2009, but was extended in May 2010 by the Satellite Television Extension and Localism Act, or STELA. STELA provided a further five-year extension of the “carry one/carry all” rule earlier adopted in SHVIA and SHVERA and was further renewed in late 2014 under the terms of the STELA Reauthorization Act of 2014, or STELAR. STELAR expired in 2019 and was replaced by the Television Viewer Protection Act of 2019, or TVPA, which made the satellite carriage provisions permanent and required satellite television operators to serve all television markets. To the extent we have decided to secure our carriage on DBS through retransmission consent agreements, the statutory carriage provisions are no longer relevant to us. The FCC has been undertaking a lengthy proceeding dealing with the revitalization of the AM band and the results may affect the ability of certain of our AM radio stations to improve their signal carriage or may affect interference among stations. As of the present, we have not experienced any negative impact on the operations of our AM stations.

Over the years, there have been legislative efforts in Congress to modify the tax laws to make advertising more expensive for businesses. Advertising is currently treated as an ordinary and necessary business expense. Should businesses not be able to deduct fully their advertising expenses in the year incurred, there could be a negative impact on advertising revenue for broadcasters. We cannot determine the effect of any such change in tax laws would have on our business and results of operations.

White Spaces. The FCC has adopted rules allowing unlicensed users to operate within the broadcast spectrum in unoccupied parts known as the “white spaces.” The intention of the rules is to make available unused spectrum for use in connection with wireless functions related to connectivity between computers and related devices and the Internet. The FCC believes that the provisions it adopted will protect broadcast services. Broadcast groups, on the other hand, believe that operation of unlicensed devices in the “white spaces” has the potential for causing interference to broadcast reception. It is premature to judge the potential impact of what services, if any, operate under the FCC’s rules on over-the-air broadcasting.

Performance Tax. While radio broadcasters have long paid license fees to composers for the musical works they have written, radio broadcasters have never compensated musical artists for their recordings of these works. The rationale was that the radio broadcasting industry provided artists, free of charge, with a promotional service for their performance.

As the entire music industry has changed, with revenues from the sale of CDs continuing to drop dramatically, both musical artists and the recording companies have sought a change in how business is done. The recording companies, with the backing of many artists, have asked Congress to require that broadcasters pay fees for the broadcast exploitation of musical works. Such legislation received favorable committee action in Congress during 2009 and 2010, but no legislation was then enacted. Congress has not taken any subsequent actions, but the issue remains under consideration. Were such legislation to be adopted, its impact would depend on how any fees were structured.

Spectrum Policies/Incentive Auction. After studying national broadband needs, the FCC determined that more spectrum should be made available for wireless broadband services based on the growing usage of wireless devices by consumers and businesses and associated spectrum needs for telephony, data transmission, and entertainment purposes. In order to avert a spectrum crisis, the FCC proposed to recover and reallocate to wireless broadband a total of 500 MHz of spectrum, of which the FCC expected up to 120 MHz (amounting to 20 channels of 6MHz each) to come from spectrum currently allocated to over-the-air television broadcasting.

In order to achieve this spectrum reallocation, Congress enacted legislation and the FCC established a mechanism for broadcasters to participate in a “voluntary incentive auction” in which interested station owners would offer the spectrum usage rights of their stations in a “reverse auction”, providing spectrum usage rights for wireless operators to purchase in a simultaneous or future “forward auction”. Through a series of rulemaking proceedings, the FCC established how stations would be valued, what percentage of the auction payments would go to broadcasters, and what rights, if any, stations that relinquished spectrum usage rights or stations agreeing to share spectrum usage rights would retain following the completion of the auction process. The incentive auction process resulted in the FCC recovering from broadcasters 84 MHz, or the equivalent of 14 television channels of 6 MHz each. Following the completion of the auction process in April 2017, the FCC provided for a repacking of the television band, commencing in late 2018 and extending until mid-2020, in order to deal with the reduction in spectrum available for over-the-air broadcast stations. This repacking has had an impact on certain of our full-service and Class A stations which have been relocated across the spectrum band. The FCC has used certain of the proceeds derived from the auction to reimburse broadcasters for certain costs associated with such repacking. Where our stations are affected by the repacking, we have sought and received reimbursement from these funds to limit the economic impact of repacking on us. We have completed the repacking of all of our repacked full-service and Class A stations in compliance with the FCC’s schedule for undertaking the transition to post-auction channels.

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In the reverse auction process, we returned the spectrum for four of our full-service and Class A stations and we received proceeds of approximately $264 million in 2017. Under the terms of the incentive auction, stations that returned their spectrum were entitled to engage subsequently in channel sharing arrangements. Under a channel sharing arrangement, a station that has returned spectrum (known as a sharee) enters into an agreement, meeting certain requirements set by the FCC, with another station that has not returned spectrum (known as the sharer), and the two parties then divide the authorized spectrum of the sharer enabling both to continue to transmit programming but with smaller amounts of bandwidth. A reduction in bandwidth may reduce the ability of a station in offering multicast programming and the revenue that can be derived from such service. In the case of two of our stations that returned spectrum, they are engaged in channel sharing with other of our stations. In the case of the other two stations, we entered into channel sharing agreements with third parties and expended certain of the incentive auction proceeds as consideration for the third parties to serve as our hosts. In the case of our Washington, D.C. Class A station, we ended our channel sharing arrangement as of December 31, 2021 and commenced a new channel-sharing agreement on December 29, 2022.

The reduction in available spectrum arising from the post-auction repacking process may also have a detrimental impact on low-power stations (other than Class A stations), which are not protected owing to their secondary status.

Human Capital Management

As of December 31, 2022, we had approximately 1,262 employees in approximately 38 countries worldwide. Approximately 548 employees were employed in the United States and approximately 714 employees were employed in foreign countries.

We are a global company, and as a result we endeavor to have a diverse and inclusive workforce reflective of our international footprint. While we do not employ specific human capital measures in our business, we are committed to the overall health, safety and wellness of our employees globally. We offer our employees various health and wellness benefits that are tailored to the countries in which they are located, which we believe provide a sense of security. We also offer career growth and development opportunities. For example, we make available to our sales team, on a global basis, training to enhance their job-related skills.

We are committed to providing a work environment that is free of unlawful harassment, discrimination and retaliation. We have a strict policy prohibiting sexual harassment, as well as harassment or discrimination based on race, gender and other specified statuses and conditions. Unlawful harassment in any form, including verbal, physical and visual conduct, threats, demands and retaliation, is prohibited. We have established hotline and anonymous complaint processes for any employee who believes that these policies have been violated.

Our overall commitment to our employees has extended to the COVID-19 pandemic. During the height of the pandemic, we implemented a work-from-home policy for our employees in several of the jurisdictions where we operate, which policy we believe delivered a sense of safety. We adopted additional safety measures in several of our jurisdictions for our employees who do not work from home, including our employees who provide essential services on-site. These measures included distancing and masking requirements, where appropriate, and communications regarding our policies and procedures related to the pandemic. We have regularly reviewed changing circumstances during the pandemic and have adjusted, and intend to further adjust, these measures, as may be appropriate, from time to time.

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ITEM 1A. RISK FACTORS

Summary

This summary is qualified in its entirety by the specific risk factors that follow this summary, as well as other risk factors contained throughout this report and referred to herein.

Investors in our company should be aware of significant risk factors, including the following:

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Risks in Our Digital Operations

If we fail to maintain and grow our relationships with media companies, our business, results of operations and financial condition could be adversely affected.

In our digital commercial partnerships business, we act as an intermediary between primarily global media companies and advertisers in 40 countries. Our continued success depends, among other things, on our ability to maintain existing relationships with these entities and develop new relationships with such entities.

We must maintain existing relationships with media companies and the digital platforms they own and operate, as well as develop new relationships with such media companies. We currently have commercial agreements, many of which are exclusive, with Meta, Spotify, ByteDance, Twitter and certain other owners of digital platforms. Some of these agreements provide that we are the only authorized intermediary for advertisers to acquire digital advertising inventory for that platform in a specific geographic market. The agreements we have entered into with these media companies provide, among other things, that we act as their representative and sell their digital advertising inventory, and achieve certain minimum target sales during specified periods of time. These commercial agreements typically have a six-month to one-year term and are subject to renewal upon expiration or are renewed automatically except for prior notice of termination. The commercial terms under these agreements, including but not limited to the amount of revenue we earn, are subject to renegotiation when they are renewed. Additionally, many of these agreements may be terminated upon notice or upon our failure to sell a minimum amount of digital advertising inventory, at our partners’ discretion. Any such changes or terminations could materially and adversely affect our revenues and results of operations, alter or result in the termination of our relationship with such media company and/or result in our withdrawal from a given geographic market.

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If we fail to maintain and grow our relationships with our advertising customers, our business, results of operations and financial condition could be adversely affected.

Our advertising customers consist of businesses or their ad agencies that place advertisements for these businesses. The agreements we typically enter into with our advertising customers or their ad agencies typically provides for a range of services, including securing advertising insertions on a digital platform, and may provide for certain managed services. Since these agreements typically do not require our advertising customers or their ad agencies to use our services exclusively, they may use other digital advertising companies – our competitors – or place ads directly with those media companies that provide such option in target markets. We must also provide our services in a way that satisfies our advertising customers or their ad agencies. Accordingly, we cannot assure you that we will be able to maintain our existing relationships with our advertising customers or their ad agencies, or develop new relationships with advertising customers or their ad agencies. They may also allocate advertising budgets towards digital platforms with which we do not have commercial agreements. If we fail to retain or expand our existing advertiser base or increase the amount of advertising purchases they make through us, our revenues and results of operations could be materially and adversely affected.

Reduced advertising inventory or advertising channels, changes in the exclusivity of our commercial partnerships or attractiveness of certain advertising channels, could have a material adverse effect on our business, results of operations and financial condition.

We act as an intermediary between primarily global media companies and advertising customers and/or their advertising agencies. In several jurisdictions we serve as the exclusive authorized commercial partner for specific media companies in relation to the sale of media inventory. The amount, quality, type and cost of advertising inventory available through our digital commercial partnerships are subject to fluctuation. Any decrease in the availability of inventory through certain channels, whether due to a decrease in inventory, a loss of our exclusive partner status or otherwise, could reduce the services we offer to our advertising customers or their ad agencies and decrease the perceived value or effectiveness of those services.

Changes in the attractiveness of inventory offered by our digital commercial partners, due to events outside our control, including changes in regulatory scrutiny, may affect our advertising customers’ desire to place advertising on certain channels and therefore reduce demand for the inventory we sell. For example, increased regulation on advertising platforms by U.S. and foreign regulators might affect the availability of inventory through Smadex or the global media companies who are our commercial partners, or reduce the value of such inventory to our customers. We may not be able to predict changes in advertiser demand for the inventory offered by any of our digital commercial partners. If we fail to maintain a diversified mix or consistent supply of quality inventory for any reason, a possible decrease in the demand for our services could have a material adverse effect on our business, results of operations and financial condition.

Economic volatility and market conditions beyond our control could adversely affect advertising spending by customers, lead to loss of customers, digital commercial partners and reduction in advertising inventory, resulting in a material adverse effect on our business, results of operations and financial condition.

Our business depends on the overall demand for advertising and on the economic health of our advertising customers or their ad agencies that use our services. Economic downturns or unstable market conditions, in the United States or in the foreign jurisdictions where we operate, have from time to time in the past caused, and may in the future again cause, advertisers to decrease advertising budgets and thereby decreasing the amounts our customers spend on advertising, which could have a material adverse effect on our business, results of operations and financial condition.

New and existing technologies and changes in third party platforms that modify the digital advertising marketplace and how advertising is conducted online could have a material adverse effect on our business, results of operations and financial condition.

Our industry is subject to rapid and frequent changes in technology, including introduction of privacy-forward technologies aimed at limiting or blocking digital advertising and customized or targeted advertising. This may include technologies such as global privacy controls which reduce the ability to serve customized advertising as well as technology that blocks advertising altogether, which may have the effect of adversely affecting our ability to direct advertising at specific audiences and demographics. Such actions could reduce the value of our services, and have a material adverse effect on our business, results of operations and financial condition.

Further unanticipated changes by third party platforms can impact our ability to use data to serve or customize advertising and affect the performance of Smadex or the global media companies who are our commercial partners, resulting in a reduction of advertising expenditures by our customers. The blocking or limiting third party cookies by Google, Apples and possibly others, on which we rely to optimize the performance of our customers’ advertising and provide value to our customers, could have a material adverse effect on our business, results of operations and financial condition.

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New and enhanced technologies and methodologies for digital advertising are being developed, including alternatives for third party cookies. As we develop and provide new products and services, they may be subject to different legal and regulatory challenges, or may not be as effective as the current technology that is used, which could have a material adverse effect on our business, results of operations and financial condition.

The digital advertising industry is evolving quickly and is highly competitive, and we may not remain competitive in the market.

The digital advertising industry experiences consistent changes in technology, evolving customer needs and demand, as well as frequent entry and departures of competing companies, products and services in the market. The market share and offerings of certain companies may change due to strategic alliances, mergers or acquisitions which could compromise the availability of advertising inventory, the development of competing technology, products or services, and change the relationships we have with current or potential customers and the primarily global media companies who are our partners. For example, our customers may acquire or develop platforms that compete with our advertising services, which could lead to a loss of customers and potential loss of market share. If we are unable to adapt to and compete with such changes, there could be a material adverse effect on our business, results of operations and financial condition.

If we fail to respond to changes in the digital advertising industry, our business may become less competitive.

Our business depends not only on our ability to effectively service the existing media companies and advertisers or their ad agencies, with which we have relationships, but to develop new solutions in order to meet the changing needs of media companies and advertisers or their ad agencies. Digital platforms are quickly evolving, while both media companies and advertisers or their ad agencies are learning more about the digital advertising industry. As advertisers further develop their own technological knowledge that would allow them to navigate the digital advertising market themselves, and to the degree that digital platforms become more directly accessible to advertisers, our role as an intermediary between media companies and advertisers could become less attractive, resulting in a material adverse effect on our business, results of operations and financial condition.

Revenue in our digital segment depends significantly on our ability to adapt to rapidly changing technology, as well as customer preferences and expectations as a result thereof.

Our industry is subject to rapid and frequent changes in technology, evolving customer needs and interests and the frequent introduction by our competitors of new and enhanced services. We must constantly make investment decisions regarding services and technology to meet customer demand and evolving industry standards. If new or existing competitors have more attractive services, we may lose advertising customers or advertising customers may decrease their use of our services. New customer demands, superior competitive services or new industry standards could require us to make unanticipated and costly changes to our digital platforms or business model. If we fail to adapt to our rapidly changing industry or to evolving customer needs, demand for our services could decrease and our business and results of operations may be materially and adversely affected.

We compete with media companies themselves, as well as with other digital advertising companies.

We compete both with other digital advertising companies and with large media companies themselves that sell their own advertising inventory directly to advertisers or their ad agencies. The decision of such media companies to compete with us may be unrelated to the results we achieve under the commercial agreements we have with such companies.

Furthermore, if we fail to respond to changes in the rapidly evolving digital advertising industry, our business model may become less attractive to media companies. Although historically global media companies have been slow to open offices in emerging economies, they may elect to do so in the future, which could materially and adversely affect our business and results of operations.

The digital advertising market is relatively new and depends on acceptance in the emerging economies in which we our digital operations are primarily focused.

The digital advertising market is relatively new and may not sustain high levels of demand and market acceptance. While display advertising, such as print advertising, has been used successfully for decades, digital advertising on mobile, social media and other devices and platforms, is less well established. We depend, in part, on a broad level of acceptance and expansion of digital advertising, especially in the emerging economies which are the focus of our digital operations. If demand for digital advertising does not continue to grow or if digital advertising solutions do not achieve widespread acceptance in the markets where we compete, our revenue and results of operations could be materially and adversely affected.

We must access digital advertising inventory on a regular basis to grow our business.

Our revenue derives from placing digital advertisements on third-party digital platforms. We do not own or operate these platforms, or the advertising inventory, upon which advertisements are placed. The commercial agreements we enter into with media companies for which we act as commercial partner do not include long-term obligations requiring them to make their inventory

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available to us for sale to our advertising customers or their ad agencies. Moreover, many of these agreements may be terminated upon notice or upon our failure to sell a minimum amount of digital advertising inventory, at our partners’ discretion. Even though digital advertising inventory has tended to exceed the demand for digital advertising, leading to excess inventory available to advertisers, we cannot guarantee that, if demand for digital advertising continues to grow, we will continue to have ready access to adequate levels of digital advertising inventory to satisfy customer demand.

To date, we have relied, and currently expect to continue to rely, on commercial partnerships with a small number of large media companies for the majority of our digital segment revenue.

We derive the majority of our digital segment revenues from a small number of global media companies for which we act as commercial partner. For the years ended December 31, 2022 and 2021, revenue from the top five global media companies for which we act as commercial partner accounted for 60% and 61% of our consolidated revenue, respectively. For the years ended December 31, 2022 and December 31, 2021, Meta alone accounted for 49% and 55% of our consolidated revenue, respectively.

We expect that we will continue to depend upon a relatively small number of global media companies for a majority of our digital segment revenue for at least the foreseeable future. The loss of any relationship with one of our existing media company customers, for any reason, could result in a loss of substantial revenue in the foreseeable future, and have a material adverse effect on our business, results of operations and financial condition.

Competition in the geographic markets in which we currently operate and in the future may operate may increase, and existing or new competitors could enter these markets.

Competition in the geographic markets in which we operate, in some of which where we have exclusive commercial agreements as commercial partner, may increase in the future. Our primary competitors are other advertising representation companies and, to an increasing degree, media companies themselves. Certain competitors may seek to gain market share by providing enhanced managed services or offering discount pricing, in response to which we may be required to lower our own fees or may lose business to new competitors. Such developments could materially and adversely affect our business and results of operations.

In certain cases, we have guaranteed payment of fees to the media companies for which we act as commercial partner, creating a significant financial risk for us.

Some of the commercial agreements we have entered into with media companies for which we act as commercial partner obligate us to guarantee fees to be paid to these media companies. This puts significant financial risk on us if we are unable to collect fees in full from our advertising customers or their ad agencies.

For example, we allocate each of our advertisers a budget that they can use to purchase digital advertising inventory. We base this budget on financial and credit information, including information provided by our advertisers. If an advertiser were to send us inaccurate information, or if we were to fail to analyze the credit worthiness of any customer accurately, among other factors, we may grant an advertiser more favorable credit or payment terms than may prove to be warranted, resulting in its difficulty in fulfilling its financial obligations to us. We would nonetheless be obligated to pay the media company its fees from the advertising placement.

Our systems and IT infrastructure may be subject to security breaches and other cybersecurity incidents.

We rely on the accuracy, capacity and security of our IT systems, some of which are managed or hosted by third parties, and our business operations may involve the transmission and/or storage of data, including in certain instances the PII of our employees and contractual partners and online users. Maintaining the security of computers, computer networks and data storage resources is a critical issue for us and our counterparties, as security breaches, including computer viruses and malware, denial of service actions, misappropriation of data and similar events through the Internet (including via devices and apps connected to the Internet), and through email attachments and persons with access to these information systems, could result in vulnerabilities and loss of and/or unauthorized access to proprietary or confidential information, including but not limited to PII. We may face attempts by hackers, cybercriminals or others with or without authorized access to our systems to misappropriate proprietary information, confidential information, including but not limited to PII, and technology, interrupt our business and/or gain unauthorized access to confidential information, including but not limited to PII. The reliability and security of our IT infrastructure and software, and our ability to expand and update technologies in response to our changing needs, the changing needs of our customers and legislative and/or regulatory requirements in the jurisdictions throughout the world where we operate, is critical to our business. To the extent that any disruptions or security breaches result in a loss or damage to our data, it could cause harm to our reputation, potentially impair our advertisers’ access to Smadex and could potentially cause operational delays and other detrimental impacts on our operations. In addition, we could face enforcement actions by governments in the jurisdictions in which we operate, which could result in fines, penalties and/or other liabilities, which may cause us to incur legal fees and costs and/or additional costs associated with responding to a cyberattack.

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Increased regulation regarding cybersecurity may increase our costs of compliance, including fines and penalties, as well as costs of cybersecurity audits and associated repairs or updates to infrastructure, physical systems or data processing systems. Any of these actions could have a material adverse effect on our business and results of operations. Although we maintain insurance coverage to protect us against some of these risks, such coverage may be insufficient to cover all losses or types of claims that may arise in the event we experience a cybersecurity incident, data breach or disruption, unauthorized access or failure of systems.

We are subject to new and rapidly evolving legislation and/or regulations in respect of protection of personal data and any failure by us to comply with these regulations could result in loss of business and/or fines.

The handling and protection of personal information, including but not limited to PII, is regulated in many jurisdictions where we operate, including but not limited to the CCPA in California, the LGPD in Brazil and the GDPR in the E.U. These privacy and data-protection related laws and regulations are evolving rapidly, with new or modified laws and regulations proposed and implemented frequently, and existing laws and regulations subject to new or different interpretations. In particular, the GDPR, which became effective in 2018, poses increased compliance challenges both for companies operating within the E.U. and non-E.U. companies that administer or process certain personal data of E.U. residents. The implementation of the GDPR prompted various other countries to implement or update their own data protection laws and regulations.

Any failure by us to comply with applicable data protection laws and regulations in any of the jurisdiction where we do business could subject us to significant penalties, negative publicity and reputational damage with our advertising customers or their ad agencies, or the media companies for which we act as commercial partner, which in turn could have a material adverse effect on our business, revenue and results of operations.

Our ability to generate revenue in our digital segment depends, in significant part, on our ability to collect data from various sources, which may be restricted by a number of factors, including restrictions imposed by third party technology companies and others.

Our ability to optimize the delivery of digital advertisements depends on our ability to successfully leverage data, including data that we collect from advertisers, publishers and third parties, as well as our own operating history. Using cookies and non-cookie based mechanisms, we collect information about the interactions of online users with advertisers and publishers’ digital properties, including, for example, information about the placement of advertisements and users’ interactions with our customers’ websites or advertisements. Our ability to successfully leverage such data depends, in significant part, on our continued ability to access and use such data, which could be restricted by a number of factors, including new developments in, or new interpretations of, laws, regulations and industry standards, consumer choice, changes in technology, including changes in web browser technology, increased visibility of consent or “do not track” mechanisms or “ad-blocking” software, and restrictions imposed by large software companies and platform providers, web browser developers or other software developers.

For example, mobile operating system and browser providers have announced product changes as well as future plans to limit the ability of app developers to collect and use data to target and measure advertising. Currently, three major web browsers - Apple’s Safari, Mozilla’s Firefox and Microsoft’s Edge – block third-party cookies by default. Google has introduced new controls over third-party cookies in its Chrome web browser and has announced plans to phase out support for third-party cookies in Chrome by 2024. In 2021, Apple made certain changes to its products and data use policies in connection with the release of its iOS 14 operating system that reduce the ability to target and measure advertising. These types of restrictions could reduce the budgets marketers are willing to commit to us and other advertising platforms, and as a result could have a material adverse effect on our revenue and results of operations.

Proposed legislation or regulations involving certain media companies with which we do business in our digital operations could have an impact on our business.

From time to time, legislatures and regulatory agencies in the United States or other jurisdictions in which we operate, have adopted or proposed legislation and regulations, including restrictions or outright bans, on the operations of certain global media companies in such jurisdiction, including one global media company with which we act as a digital commercial partner outside the United States. While we cannot at this time determine whether or how any such proposals would affect our digital operations, revenue and results of operations, potentially the costs to monitor such developments in a large number of jurisdictions worldwide where we currently operate and may operate, the costs to comply with any such legislation and regulations which may be adopted in any such jurisdictions, and the costs to modify the way we currently do business to comply with any such legislation and regulations, could be significant.

Our international operations subject us to significant costs and risks, which risks may increase if and as our overseas operations continue to expand.

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Our international digital operations subject us to many risks associated with supporting a rapidly growing business across many cultures, customs, monetary, legal and regulatory systems, primarily in emerging economies. We currently have personnel in 40 countries on five continents, and the countries in which our personnel are located and in which we operate includes primarily emerging economies. Such general risks include but are not limited to geopolitical concerns, local politics, governmental instability, socioeconomic disparities, fiscal policies, high inflation and hyper-inflation, currency fluctuations, currency exchange controls, restrictions on repatriating foreign-derived profits to the United States, local regulatory compliance, punitive tariffs, unstable local tax policies, trade embargoes, import and export license requirements, trade restrictions, greater difficulty collecting accounts receivable, unfamiliarity with local laws and regulations, differing legal standards in enforcing or defending our rights in courts or otherwise, the possibility of less favorable intellectual property protection than is provided in the United States, changes in labor conditions, difficulties in staffing and managing international operations, difficulties in finding personnel locally who are capable of complying with the financial and reporting requirements of U.S. reporting companies, actions taken by foreign governments to respond to localized public health emergencies, such as recent quarantines and travel restrictions related to the COVID-19 pandemic, and other cultural differences. Foreign economies may differ favorably or unfavorably from the U.S. economy in growth of gross domestic product, rate of inflation, market development, rate of savings, capital investment, resource self-sufficiency and balance of payments positions, and in many other respects.

Some of the key specific risks to which we are subject as a result of our international operations in those markets where we currently operate, and those markets where we may expand our operations in the future, include, but are not limited to:

As a result of the breadth of our rapidly growing international digital operations, we may incur significant operating expenses, especially measured as a percentage of revenue generated in some of the markets in which we operate and may operate in the future. Our failure to manage successfully our growth internationally could adversely affect our result of operations and financial condition.

Foreign exchange controls and other restrictions on the movement of capital out of certain jurisdictions or otherwise may adversely affecting our ability to repatriate funds.

We keep cash and cash equivalents in certain jurisdictions that have foreign exchange controls, including Argentina, Brazil, India, Nigeria, Pakistan and South Africa, which could result in restrictions on the movement of capital, including our ability to repatriate funds to the United States. Certain other jurisdictions in which we currently or may in the future operate, also have or may

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have foreign exchange controls or restrictions on the movement of capital, including restrictions on repatriation of funds. Generally speaking, foreign exchange controls take different forms, but may include restrictions on the amount of funds that can be transferred or dividends that can be paid upstream to us from such jurisdictions. For example, in certain jurisdictions, including Argentina, India and South Africa, we must obtain regulatory approval prior to the repatriation of funds from these jurisdictions. We work to obtain applicable approvals in the jurisdictions that impose these controls and restrictions, but we cannot provide any assurance that such approvals will be obtained in a timely manner, or at all. These exchange control measures may also prevent or restrict the ability to hold foreign currency in cash within the relevant jurisdiction. If we are unable to transfer such amounts from such jurisdictions when and as needed, we will remain subject to foreign exchange risk relating to such retained funds denominated in local currencies, to the extent we cannot convert such funds into other currencies (whether as a result of foreign exchange restrictions in such jurisdictions or any restrictions on transferring funds out of such jurisdictions). This may subject us to significant foreign exchange risk, which could have an adverse effect on our results of operations, liquidity and financial condition.
 

In addition, repatriations of funds from other jurisdictions may be subject to withholding, income and other taxes under the laws of those jurisdictions. If our international locations are unable to repatriate funds and/or make other payments or transfers of funds to us when needed, we may be unable to satisfy certain of our financial obligations, which could adversely affect our business, results of operations and cash flow
.

Political instability and greater government control of society and local economies are not uncommon in many emerging economies, including some of the markets in which we operate and may operate in the future.

We operate in 40 countries. The governments of some of the countries in which we operate, primarily emerging economies, often exercise significant influence or control over such countries’ economies. In addition, due to a certain level of political instability, changes in government, regimes or political philosophy as a result of democratic or non-democratic actions, may result in changes in policy and regulations. These changes could be sudden and fundamental. Some of such actions and resulting changes may include, among other things: